Hello-

I was going to school in the US under F1 student visa from January 1999- April 2004. I changed my status to H1B in December 2004, and then I worked in the US till August 2005. I was a nonresident from 1999 to 2003, and then I filed as a resident alien for tax years 2004 and 2005.

I left the US in Aug 05 to work in my home country.. I just came back to the US in August 08 under F1 for law school which is a 3 year program.

Even though I used up all five years for 8843, can I still claim a closer connection to my home country while I'm in school? What kind of proof would the IRS require?

Also, if I start working in September 2011 under F1 OPT or H1B, would it be possible to claim nonresident alien status for tax year 2011? (For 2011, it'd be something like F1 from Jan to May, F1-OPT from May to Oct, and then H1B from Oct to Dec)

Normally, now your days on F1 are not exempt from residency.
Closer Connection means that every year you spend more number of days in your country than in the U.S.
Also, what is the advantage of claim exempt status?

As a nonresident, I wouldn't have to pay taxes on any investment income generated in my home country, and I wouldn't owe any capital gains tax. I could be totally wrong, though. Also, if I remember correctly, a nonresident alien under F1 OPT doesn't have to pay FICA. Please correct me if I'm wrong.

You are correct about NOT paying tax on world-wide income and not being liable for FICA taxes.

However, if you claim closer connection to your home country, the burden of proof is on you, and the instant you apply for H-1B status, you LOSE any chance of claiming closer connection.

I agree that you may be able to claim nonresident status, but that the burden of the closer connection to your home country is on you. If you apply for a green card, then you likely will not be successful in arguing that you are temporarily present in the U.S. The regulations do not identify such a bright-line test for applying for a H1-B visa.