Hi, My husband and I worked in two separate states (NC and VA) for a year. We filed Federal taxes MFJ but we are confused on filing states. Wife worked in NC, no VA income. Husband worked in VA, no NC income. If we choose to do MFS on states, how we will we work out who claims the kids, mortgage interest, etc? Can only one claim the deductions? How will that work?

Normally, states require that you file in the same way you filed your federal tax return.
For the state you are resident, you will report your income. In the state you are nonreisdent, you do not report any income. Your U.S. Tax Return: Working or Living in Two or More states (http://taxipay.blogspot.com/2008/06/working-in-two-or-more-states.html)