I am on H1 Visa and my wife on H4 visa. Can I file my 1040 along with Form w-7 for TIN? Can I file my State Tax along with W-7?

You can file the Form 1040 jointly with your wife, putting your wife's name under yours and leaving the SSN BLANK. You BOTH sign the tax return.

You then attach a completed copy of the W-7 (signed by your wife) along with a notarized photocopy of her passport to the Form 1040.

If you have both been in the U.S. for all of 2006 as H-1/H-4, then that is all you need to do. Mail the return to the Austin, Texas address in the W-7 instructions.

If you have been in the U.S. for only part of 2006, but arrived in country before 3 July 2006, then you must attach a statement specified in IRS Pub 519.

If you arrived AFTER 2 July 2006, then you must wait before you file to meet the Substantial Presence Test for 2007. The wait will be to at least early May and may be as long as early July. Read the first 10 pages of IRS Pub 519 to see how SPT is calculated.