Hi,

I have moved from India in July 2007 and working here on Salary. My wife also moved with me and she is also working (Has a work permit and PAN number too). We have one kid 3 yrs old too. So below are my questions:

1. I think I need to file 1040NR? Is that right?
2. Can I file Jointly using 1040NR?
3. Can I claim standard Deduction for both me and my wife?
4. Can I also claim USD3400 personal exemption for all three.

I do not mind filing as resident but thwn I will have foreign income also and will I get tax credit for foreign income as I have paid off taxes as I have paid taxes in India also.

It's not straightforward. At this stage you are not eligible to file as a resident so you would have to file NR. You might be eligible to become a resident in 2008 and then make two elections allowing you to be resident for 2007. That would require you to report your Indian income and claim a foreign tax credit.

TTE has it right (as always).

BTW, you CANNOT file jointly using Form 1040NR.