My wife and I are both Japanese Citizens.
She works in Japan, I work in the USA.
CAn I file a joint return.

If not, can I file married separate and claim her exemption?

Thanks

Which visa do you have? When did you enter the U.S. Read: Your U.S. Tax Return: The U.S. Visas (http://taxipay.blogspot.com/2008/08/us-visas.html)

I guess it is H-1, not sure right now. I came to the US in 2006. My wife works in Japan. So I am a resident alien, she is a non-resident alien. We do NOT want to declare her income as US income. I also have been claiming my daughter as a dependent, she lives in Japan all the time. I spend time in both Japan and USA.
So I wish to file married filing separately, claiming both my wife's exemption and my daughter as a dependent. Is that OK?

Sorry, my visa status is E-2. Hope that helps.

Yes, you should file married filing separate and claim both your wife and your child as dependents. You claim your wife as a dependent under U.S. statutes and your child as a dependent under the U.S.-Japan Income Tax Treaty.

Good and thanks.. I should have mentioned that my daughter is a US Citizen having been born in the USA. I will proceed.