Here's the situation:

I'm a Permanent Resident, worked full-time in the US in 2006.
My spouse was on an H-1, worked in the US till July went back to home country. He worked in home country from July, earned equivalent of $2500 in 2006. He has no immediate plans of returning to the US. He paid taxes equivalent of $650.
We usually file jointly, with joint accounts, etc.

How do we report his foreign income? Should I file a Form 1116? Can we get foreign tax credit even though he was not a permanent resident? If yes, can form 1116 be filed electronically?

Please help! Thanks!

You can file jointly, but not electrronically, as he must sign a statement stating his choice to file jointly with you. You can file Form 1116 to claim a tax credit for the foreign taxes paid.