I am an Indian National and I have been in US on F1 since Aug 2001.
My F1 expired on June 2006 and I was on OPT till my H1 began in Oct 2006 (havent got H1 stamped as yet).
I had filed 1040NR for the past five years but read that after 5 years, I should start filing as a resident. Is this correct, do I file as resident for 2006? Also, the other main question is that I had been on an internship from Jan-Mar 2006 in UK while I was still on my F1. I don't know if I should report this income in my taxes. I was taxed in UK anyway and I don't know if I should present that income again here to be taxed?

Someone responded earlier mentioning that I should file as resident and present my foreign income and take foreign credit. In that case I am still left with some questions:
1. Should I report it in the "other income" question? Wouldn't that lead to me being taxed for it again? Is there a specific exchange rate that I am supposed to use to convert the income in pound to $ ?
2. When I left for the internship while on F1, I was told at school that I was allowed a maximum absence of 5 months from US while on F1 to maintain my status; so my doing an internship for 3 months outside the country was more like a vacation for their records and they didn't even have to (work) authorize me for that. Does this mean that I can also choose not to report the income from that intership outside US?
This would just make my taxes complicated. So I am trying to see if I really need to mention this foreign income, given that I have already been taxed for it!

Please... Any help to these questions would be very very helpful.

Thanks!

For tax purposes, your F-1 exemption expired on31 December 2005.

So, for 2006, you are a resident alien. Hence, you must report ALL world-wide income earned in 2006, be it earned in the U.S. UK, or the moon, for that matter.

You should claim the Foreign Tax Credit for the taxes you paid to the U.K. Use Form 1116 for that purpose.