Hi,
I live and work in Philadelphia while my wife works in Wilmington, Delaware. In 2007 her total gross income was <5000 while mine was around 40K. My filing status is married filing jointly. I am aware of the fact that when a person's income is below 3500 after deductions, he/she can get back the federal and state taxes paid. Does this apply to my wife?
Thanks,
johns_mike

Not exactly. Since you file as MFJ your taxes are calculated on the total of both your incomes. Any withholding your wife had is combined with your withholding, and the total is used to offset your total tax bill.