Canadian couple filing for US tax for the first time (J-visa

[acmmak]

Hello,

I am still trying to wrap my head around the situation in preparation for the tax filing. Scenario:

- I moved to California in Feb 01, 2008 as a J-1 research scholar (No Canadian income for the entire 2008)
- My W-2 Box 1 is about $40,000 USD with federal, state, social security and medicare tax withheld
- My wife moved to California in Apr 15, 2008 as a J-2. She made approximately $15,000 CAD when she was still in Canada.
- My wife also made just over $6000 USD after the move to USA (received W-2)

My understanding is that we need to each file 1040NR (plus the California State one). What is the best way to go about it? What is this tax treaty exemption that I kept hearing about?

Also, what about the medicare tax? I read that J1 visa is not supposed to have the medicare tax withheld, correct?

Any pointers will be greatly appreciated. Thank you very much.

Andy