How to File as a Dual-Status Alien

If you’re not a natural-born citizen, the IRS taxes you a bit differently. If you hail from another country, depending on when you moved to the U.S., the IRS may tax you in three different ways. Learn which one applies to you as a dual-status alien, so you don’t make errors when filing.

Dual-Status Alien: Definitions

How the government and the IRS define your status can be tricky:

Nonresident alien: An individual that is not a citizen, has not passed a green card test, or a substantial presence test. The IRS may or may not tax them the same as a citizen, depending on wages.

Resident alien: An individual that is not a citizen, but has passed a green card or substantial presence test. They have also resided in the U.S. for the entire tax year. Typically the IRS taxes them the same as a U.S. citizen.

Dual-status alien: An individual that falls under both the nonresident and resident alien status. They become a resident alien when they have resided in the U.S. for 183 days or more. Therefore, they pass the substantial presence test.

How A Dual-Status Alien is Taxed

You’ll need to consider your taxes in 2 parts, one for each status. As a nonresident alien, you will be taxed on the U.S. income you made during the tax year, while you will be taxed on your worldwide income while you were a resident alien.

How to File

Unfortunately, you cannot e-file as a dual-status alien. Assuming you are a resident alien at the time of filing, you will file a 1040 and write ‘Dual-Status Return’ at the top. You must report any U.S.-sourced income while you were a nonresident.

To do so, attach a statement to your return, or use Form 1040NR. If using this form, write ‘Dual-Status Statement’ at the top. If you are a resident alien at the beginning of the tax year and a nonresident at the end, you will simply switch these forms. The 1040NR serves as your return and the 1040 serves as your statement.

Restrictions

As a dual-status alien, you cannot take advantage of some deductions and statuses. These include: the standard deduction (you may itemize U.S.-related deductions), head of household filing status, joint filing status (unless you are married to a U.S. citizen/resident alien.

If this case sounds like yours, your only other option is married filing separately). And the IRS only allows spouse or dependent exemptions for the part of the year that you are a resident alien. Finally, if you are a nonresident alien and married to a U.S. citizen/resident alien, you cannot claim various credits. These include the earned income credit, elderly/disabled credit, or education credit. Unless you choose to be taxed as a resident alien along with your citizen/resident spouse.

Filing as a Dual-Status Alien

Many exceptions, restrictions, and particulars apply when filing as a dual-status alien, and a non-citizen in general. You should always consult your trusted tax professional. They can help make sure you comply by the IRS and filing in the way that best benefits your finances.