I was on F-1 since August2007 until Sept 30th 2009.(The same for my wife on F2)
Got H1B on Oct 1st 2009.(The same for my wife on H-4).
I have a daugther( US citizen) born in August 2008.
If I file as resident will get 6K+ back. If not resident will get 1k back.
How should I file? Will filing the wrong way affect my future application for a green card?
Will this amounts of returns trigger an audit?

Thanks!

File jointly, but you need to:

1) WAIT until 1 June 2010 to file (in order to meet the Substantial Presence Test) and

2) Mail your return with a statement that says you and your wife CHOOSE to be treated as resident aliens for all of 2009.

This is perfectly legal; the procedure is detailed in IRS Pub 519.

There will be NO audits and no future issues with your green card application.

Thanks a lot for your response AtlantaTaxExpert.

I want to make sure on a couple of things:
To be able to file on June 2010 I will need to file form 4868 by April 15th 2010, correct?

My wife does not have a Social Security number and Form 4868 asks for spouse's SSN (under visas F2). Should I file the request for an ITIN (form W-7) with the Form 4868 by April 15th or should I do it in June 2010 when I will file jointly as residents?

Thanks a lot for your response AtlantaTaxExpert.

I want to make sure on a couple of things:
To be able to file on June 2010 I will need to file form 4868 by April 15th 2010, correct?

My wife does not have a Social Security number and Form 4868 asks for spouse's SSN (under visas F2 OR h2). Should I file the request for an ITIN (form W-7) with the Form 4868 by April 15th or should I do it in June 2010 when I will file jointly as residents?

You can file Form 4868 in your name alone. It is OK for joint return.
Do your tax calculation or complete your return (do not file) and make sure to pay any tax due by April 15, 2010.