My husband moved due to work from CA to NY January 1, 2010 on the other hand I didn't move until July 1, 2010 and continued work in NY (from January till July) so the question is:

How to file in NY: Husband no income, wife income
How to file in CA: Husband income, wife income

Federal status: married filing jointly

But how about the State? Very confusing! Your help is really needed on this one

Please clarify - did you move from NY to CA, or from CA to NY??

I am going to assume that your husband lived and worked in CA all year, and you lived and worked in NY from January - June and CA from July - December. What you do is first figure your NY taxes using the part-year resident return, IT-203. Using this form allows you to segregate your NY-source income from your non NY-source income, and you pay taxes to NY only on the NY-source income. Then figure your CA taxes - you can use the standard form (Form 540), file jointly and report your total joint income for the full year and figure CA taxes on it all, but then you take a credit for taxes paid to other jurisdictions - namely NY. In this way your CA taxes are reduced by the amount you paid to NY State.

Thank you, you assumed correctly!
So should I file married filing sep with NY or joint then claim credit for taxes paid to other?

File jointly in both states. For NY you don't claim any credit for taxes paid to other states, because you only pay them taxes on income you earned in NY (not your husband's income). But for CA you report all income - including your NY-source income - so you take the credit to offset that.

That makes sense! Light just came on, thank you very much for taking the time to help