Dual-Status Taxpayer

What Is a Dual-Status Taxpayer?

A dual-status taxpayer is a citizen of one more nation who, in a single calendar year, lives in the U.S. Sufficiently long to qualify as a resident alien and lives outside the U.S. for enough time to qualify as a non-resident alien.

As a foreign national, you are generally taxed one of three ways: as a non-resident alien, a resident alien, or a dual-status alien. In the event that you have kept up with both statuses in a similar calendar year, you will have to file as a dual-status taxpayer.

Classification as a dual-status taxpayer doesn't matter to an individual's citizenship; it is just in reference to one's resident status for United States tax purposes.

The Internal Revenue Service (IRS) requires dual-status taxpayers to file a form 1040. The dual-status taxpayer is taxed on income from all sources received during residence in the U.S. what's more, just U.S. income received while outside the U.S.

Figuring out the Dual-Status Taxpayer

The dual-status taxpayer designation depends on the number of days the foreign national lives in the United States. The fundamental cutoff is 183 days, yet the IRS has a substantial presence test to decide if a taxpayer falls into this category. A foreigner who doesn't live in the United States sufficiently long to meet the substantial presence test is sorted as a non-resident alien.

Most dual-status taxpayers come to the U.S. to work and have acquired green cards allowing them to legally work. Many will have this status for only one tax year, the year in which they show up, and maybe another year (the year in which they leave). In the middle between, most will be living and working in the U.S. for the full year.

Special Considerations

Limitations When Filing Dual-Status Returns

A large number of the benefits of U.S. citizenship are not accessible to dual-status taxpayers. Remarkable among these is the powerlessness to take the standard deduction on Form 1040, albeit certain itemized deductions are allowed.

For example, one can claim exemptions for a spouse and wards for the portion of the year when the taxpayer's filing status was a resident alien. Be that as it may, dual-status tax filers can't file as a head of household or filing jointly with a spouse, albeit the last option is accessible assuming the person is married to a U.S. citizen by the last day of the tax year.

Which U.S. tax form to file relies upon the person's status on the last day of the year. It is important to write at the highest point of the tax form "Dual-Status Taxpayer." The IRS has broad information on U.S. taxes on foreign nationals on its website.

Illustration of a Dual-Status Taxpayer

Brigitta is an Austrian citizen who had never visited the U.S. until she showed up with a visa on June 10, 2020, and remained until the end of the year. Since she was in the U.S. for over 183 days, she meets the necessities of the substantial presence test.

Brigitta is a dual-status alien since she was both a non-resident alien and a resident alien around the same time. She is viewed as a non-resident alien from Jan. 1 to June 10, and a resident alien until the end of the calendar year.

For the part of the year in which she was classified as a resident alien, she will owe U.S. federal taxes on all income she received from any sources. For the non-resident portion of the year, just the income she received from U.S. sources will be taxed.

Most nonresident aliens can claim one withholding allowance on their payroll W-4 forms, albeit some might be permitted more in specific situations.

Features

• A dual-status taxpayer is a foreign citizen who lives in the U.S. for a substantial part of a year.
• Most dual-status taxpayers come to the U.S. to work and have gotten green cards allowing them to legally work.
• The Internal Revenue Service (IRS) requires dual-status taxpayers to file a form 1040.
• The dual-status taxpayer is taxed on income from all sources received during residence in the U.S. what's more, just U.S. income received while outside the U.S.
• The IRS has a "substantial presence test" to figure out who qualifies.