If you transfered your visa from F-1 to H1-B in 2004, and you stay in USA not beyound 5 years and as H1-B visaholder not over 183 days in 2004,generally speaking, you may file 1040NR or Dual-Status Alien by making first-year choice, just few cases you may file 1040 .Actually, Dual-status filing is no tax benefit excluding paper works.
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Please note the PUB 519 never say making first-year choice you may become a resendential for THE WHOLE YEAR, the PUB always says making the first-year choice you may treated as a residential for PART OF THE YEAR.
This is a very good sample for handling and understanding this kind of special situation tax return: http://www.irs.gov/publications/p519/ch06.html#d0e6898
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I did some tax research on IRS website, and post some important information(from Pub 519) at here as your referrence at here. http://www.irs.gov/publications/p519/index.html
Please note the CAP words.
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1.You are a resident alien of the United States for tax purposes if you meet either the green card test or the substantial presence test for the calendar year (January 1–December 31). Even if you do not meet either of these tests, you may be able to choose to be treated as a U.S. resident for PART of the year. See First-Year Choice under Dual-Status Aliens, later.
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2.First-Year Choice (suppose file 2003 tax return)
http://www.irs.gov/publications/p519/ch01.html#d0e1384
If you do not meet either the green card test or the substantial presence test for 2002 or 2003 and you did not choose to be treated as a resident for part of 2002, but you meet the substantial presence test for 2004, you can choose to be treated as a U.S. resident for PART of 2003. To make this choice, you must:
1) Be present in the United States for at least 31 days in a row in 2003, and
2)Be present in the United States for at least 75% of the number of days beginning with the first day of the 31-day period and ending with the last day of 2003. For purposes of this 75% requirement, you can treat up to 5 days of absence from the United States as days of presence in the United States.
When counting the days of presence in (1) and (2) above, do not count the days you were in the United States under any of the exceptions discussed earlier under Days of Presence in the United States.
If you make the first-year choice, your residency starting date for 2003 is the first day of the earliest 31-day period (described in (1) above) that you use to qualify for the choice. You are treated as a U.S. resident for the rest of the year. If you are present for more than one 31-day period and you satisfy condition (2) above for each of those periods, your residency starting date is the first day of the first 31-day period. If you are present for more than one 31-day period but you satisfy condition (2) above only for a later 31-day period, your residency starting date is the first day of the later 31-day period
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3. Choosing Resident Alien Status
http://www.irs.gov/publications/p519/ch01.html#d0e1572
If you are a dual-status alien, you can choose to be treated as a U.S. resident for the entire year if all of the following apply.
1) You were a nonresident alien at the beginning of the year.
2) You are a resident alien or U.S. citizen at the end of the year.
3) You are married to a U.S. citizen or resident alien at the end of the year.
4) Your spouse joins you in making the choice.
This includes situations in which both you and your spouse were nonresident aliens at the beginning of the tax year and both of you are resident aliens at the end of the tax year.
Note.
If you are single at the end of the year, you cannot make this choice.
If you make this choice, the following rules apply.
You and your spouse are treated as U.S. residents for the entire year for income tax purposes.
You and your spouse are taxed on worldwide income.
You and your spouse must file a joint return for the year of the choice.
Neither you nor your spouse can make this choice for any later tax year, even if you are separated, divorced, or remarried.
The special instructions and restrictions for dual-status taxpayers in chapter 6 do not apply to you.
