Should I use the 1040 or 1040NR? What's the difference between these two? (Are there less tax deduction for NR?)

1. If you did not complete SPT in 2008, you will file non-resident tax return.
2. If you were not present in the U.S. up to June 2008 and completed SPT, the you will file Dual status return.
Read Your U.S. Tax Return: Substantial Presence Test (http://taxipay.blogspot.com/2008/04/substantial-presence-test.html)

If you are married, you also the option of filing jointly with your spouse, even if the spouse is NOT in the U.S. with you.