When Are You Considered a Dual-Status Alien for U.S. Tax Purposes?

Generally, if you are a resident of the U.S., you are subject to U.S. federal income tax in the same way as a U.S. citizen. That is, you are subject to U.S. income tax on your worldwide income and can claim the same exemptions, deductions and credits as a U.S. citizen. When you file your annual federal income tax return you would use Form 1040, or Form 1040A or 1040EZ, if you meet the requirements to file a simpler return.

If you are a nonresident but are subject to U.S. income taxes, for example if you have income from sources in the U.S., different rules apply and you would file a nonresident tax return using Form 1040NR or 1040NR-EZ.

But there may be years in which you are a U.S. resident for part of the year and a nonresident for part of the year. As indicated by the IRS, this would generally occur the year you arrive in or depart from the U.S. In that year you would be considered a dual-status alien for U.S. federal income tax purposes.

You become a resident for U.S. tax purposes when you meet either the green card test or the substantial presence test. According to the IRS, you meet the green card test when you are issued a green card by the U.S. Citizenship and Immigration Service admitting you as a lawful permanent resident of the United States.

You generally meet the substantial presence test when you have been physically present in the U.S. for at least 31 days during the current year and a total of at least 183 during the current year and the prior two years. All the days you were present in the current year count toward this total, plus one-third of the days last year, and one-sixth of the days the year before last.

In the year you are considered a dual status alien, for the part of the year you are considered a resident you will be subject to federal income tax on all your income from all sources. And for the part of the year you are considered a nonresident, you are subject to tax on income from U.S. sources and on certain foreign source income that is treated as being effectively connected to a U.S. trade or business. So it is important to determine the date on which you are treated as a resident.

If you become a resident based on the substantial presence test, your residency for tax purposes generally starts on the first day you are present in the U.S. If you meet the green card test but not the substantial presence test, you are considered a resident starting on the day you are physically present in the U.S. as a lawful permanent resident. If you meet both the substantial presence test and the green card test, your residency starts on the first day you are present in the U.S. under the substantial presence test or as a lawful permanent resident under the green card test, whichever date is earlier.

In terms of when you stop being a resident for tax purposes, if you were a U.S. resident last year but are not a resident during any part of the current year, your U.S. residency for tax purposes generally ends on December 31 of last year. But in certain cases you may qualify for an earlier ending date.

If you meet the substantial presence test, your residency would end on the last day you are physically present in the U.S. And if you meet the green card test, your residency would end on the first day you are no longer a lawful permanent resident of the U.S. You would be considered a nonresident for the rest of that year if your tax home was in a foreign country and you had a closer connection to that foreign country.

Sources:

Publication 519, U.S. Tax Guide for Aliens, IRS

Reference:

• U.S. Income Taxes for Nonresident Aliens: voices.yahoo.com/us-income-taxes-nonresident-aliens-24377.html?cat=3
• What Tax Deductions Can a Nonresident Foreign Person in the U.S. Claim? voices.yahoo.com/what-tax-deductions-nonresident-foreign-person-794051.html?cat=3
• When Are Foreign Workers in the U.S. Exempt from the Social Security Tax? voices.yahoo.com/when-foreign-workers-us-exempt-the-758801.html?cat=3