My friend (Married , H1 , Indian) stayed in US for around 4 months in 2004 mid and returned to India . Filled 1040 NR - EZ for 2004 and with status as Married Single.

Friend came back to US in Oct 2005 only and continued to stay in US.

1. Since friend did not qualify for resident as substantial presence test . Whether he need to file 1040NR ?

2. He will be in US for full year and will qualify for presence test in 2006. In that case , is it possible to file as Married resident for 2005 and also claim spouse exception in the return ?

1) Yes, he will need to file Form 1040NR for 2005.

2) For 2006, he can file as a resident alien (Form 1040 or 1040A or 1040EZ) and submit Form W-7 to apply for an ITIN in order to file jointly with his spouse.