Hi,

I am in USA since last 1.5 years, and am F1 visa. My wife also came to US with me 1.5 years back, and is on F-2 visa. But from Oct 1 2008 to Dec 31 2008, she was working and was on H1B visa. But for rest of her stay in US, she has been on F-2 visa and is currently also on F-2 visa.

I want to know whether she should file her federal tax returns as resident or non-resident. According to the Substantial Presence Test (Substantial Presence Test), she is a non-resident. But her visa status on Dec 31 2008 is resident.

I will appreciate any help/guidance in this matter.

Thanks,
Jayesh

She is nonresident. Only days on H1-B are exempt from residency but she did not complete SPT in 2008 and will not complete in 2009.
Read: Your U.S. Tax Return: U.S. Tax Filing Requirements for Non-Residents

Note that you could file jointly and you BOTH choose to be treated as resident aliens.