I came to USA in JULY 2000 and graduated with an MS in Dec 2002. Was on OPT all of 2003 and started my second Masters in Jan 2004. I worked as a research assistant at school and in 2006 got an internship in MAY and worked on CPT. I continued working full time as an intern thru fall 2006 and also went to school full time in fall. The company i worked for did my H1 and my H1 started in Nov 2006. I am confused about my tax status and as to what forms i need to fill out.

You need to file as a resident alien for BOTH 2005 and 2006.

The five-year period where you would file as a non-resident alien under the F-1 visa expired on 31 Dec 04.

that means i need to file 1040 or 1040ez and cant claim the standard deduction. am i correct?

No, you CAN claim the standard deduction for both 2005 and 2006.

If you need professional tax advice, contact me at david.kempe@<hidden>.