Filing as MFS is almost always the worst way to go tax-wise. When a married couple files separate returns, they both automatically lose a lot of tax credits and deductions they would otherwise qualify for if they filed joint. I am assuming that both of you are legal residences of PA.
The federal return will be filed joint. You already know and understand that.
The PA return will also be filed joint, with your CA income reported as income earned outside the state of PA.
For the CA return, I'm not exactly clear for that, but it should be filed as a joint return and I "think" only your wife's income that was earned in CA gets reported on that. (Wait for another response in this thread to clarify that.)
Two things I do want to point out, since you will be filing two state returns.
1. After you complete the federal return in it's entirety, complete the non-resident CA state tax return "BEFORE" you even start the PA resident state tax return. This is because many states have reciprocal tax agreements so that you don't get double-taxed across two or more states on the same income. By completing the resident state tax return last, that allows the TurboTax program to *correctly* account for any reciprical tax agreement that may exist between CA and PA.
2. Do not file "any" tax return until you have completed "all" tax returns and you are 100% satisfied with the results. When completing the non-resident state, as well as the resident state tax return, it *will* change things on the federal return. Additionally, as you complete the resident state return last, it *will* change things on the non-resident state return. Especially if there's a tax agreement between PA and CA.
