Ok Here is my situation

Myself
1. Resdient of PA for the whole Year of 2007

Spouse
1. Resident of PA, but worked and lived in VA from 1 Jan 2007 to 30 Sep 2007
2. Moved to a new job in PA from Oct 1, 2007

How should I file my taxes. Should I file jointly or separately. Also, how should my spouse file her state taxes.

Thank your for your help in advance

You have a choice: you can file jointly or file separately. I normally do it BOTH ways for my clients, then compare.

If you file jointly on the federal return, you usually have to file jointly on BOTH state returns, but you will pay taxes ONLY on the income earned with each respective state's borders.

Both state returns would be part-year returns if you file jointly.

If you file separately, then your PA return would be as a full-year resident, while your spouse's VA and PA returns would be part-year returns.