Hi
I have been in New York, US since 8th December 2006 and have J1 visa (trainee). I have SSN and have been working as Software Developer for the company which provided me with J1 trainee visa.
My wife came to US in March 2007 as J2 and then she got her L1 status on April 18, 2007. She started to work for US company since May 14, 2007.
The questions are:
As far as I understand I am not a resident (J1 visa holder are exempt from residency for two years). Does it mean that I am non-resident both of New York State and US?
Is my wife a resident?
Should we file our taxes jointly or separately?
Should we pay New York State tax and federal tax?
Thanks.

You ARE a non-resident alien for the federal tax return, but NOT for the NY return, because you are NOT a student.

Your wife is a dual-status alien.

You CAN file jointly with her and you BOTH choose to be treated as resident aliens.

Or you can file separate returns, you as a non-resident alien and she as a dual-status alien.

In either case, you WILL pay federal and state income taxes.

You became a resident alien starting on 1 January 2008 (the 23 days you spent on J-1 status in 2006 counted for an entire year), so you probably will get the best tax advantage by filing jointly.