Dual-status alien tax return: 2025 complete filing guide
Every US taxpayer has to file an annual return – but things get more interesting when residency changes midyear. Spending only part of the year as a resident and the rest as a nonresident makes you a dual-status alien under IRS rules. It’s a unique position that calls for special filing steps, careful income reporting, and attention to deductions and credits that don’t apply the same way to everyone.
This article is brought to you by Taxes for Expats, your trusted partner for clear, accurate cross-border tax solutions. We guide clients through every detail and highlight key restrictions when filing a dual-status return so each entry meets IRS standards with confidence. Learn more about our services or contact us.
Who is a dual-status citizen?
Crossing borders can do more than change where you live – it can also change how the IRS views your tax status. When that move happens partway through the year, your residency is split in two, creating what’s known as dual status for tax purposes.
A Dual-status alien is someone who qualifies as a US resident for part of the year and a nonresident for the rest. The IRS defines this as a situation where residency begins or ends within the same year, often because a green card is issued, surrendered, or the substantial presence test is met for only part of the calendar year. In practice, this makes the person a Dual-status taxpayer, with income divided according to where and when it was earned.
- During the resident period, income from every source is included as worldwide income, taxed under the same rules that apply to citizens.
- During the nonresident period, only income connected to the US is taxed, with possible adjustments under an applicable tax treaty.
This balance lets the IRS match real-life movement with fair reporting, recognizing that financial life often spans more than one country in a single year.
NOTE! that the rules are guided by two tests that determine when residency begins and ends – the substantial presence test and the green card test.
Substantial presence test
Residency can depend not just on legal status but on how much time someone actually spends in the country. The substantial presence test measures the time to decide if a person is treated as a resident for tax purposes. It applies when at least 31 days are spent in the US during the current year, and the total presence over the current and two previous years equals 183 days using a weighted formula: all days from the current year, one-third from the year before, and one-sixth from the year prior to that.
A person spending 150 days in 2025, 120 in 2024, and 90 in 2023 would reach 205 weighted days and qualify as a US tax resident. Someone with 120, 90, and 60 days over those same years would total 160 days and remain a nonresident. Certain days don’t count toward this total, such as time spent on F, J, M, or Q visas, or while in transit, commuting from Canada or Mexico, or serving as a crew member. The IRS provides the full list of exempt days and related details.
Green card test
Unlike the time-based rule, the green card test focuses on immigration status and the moment lawful permanent residency begins. When a person receives a Permanent Resident Card (Form I-551) from USCIS, they’re officially recognized as a lawful permanent resident for tax purposes.
If the card is issued midyear but the substantial presence test isn’t met, residency starts on the first day the individual is physically present in the US as a green card holder. Someone arriving on July 1, 2025, and receiving the card that day is treated as a nonresident from January through June and a resident from July onward.
First-year choice and special filing paths
Transitions in or out of the United States can reshape how a dual-status alien’s tax year is reported. Rules like the first-year choice, expatriation provisions, and the closer connection exception determine when residency starts or ends and how income is split between resident and nonresident periods.
- First-year choice: When a nonresident becomes resident next year, you can make a first-year choice by attaching a statement to Form 1040 stating you weren’t resident last year and will meet the substantial presence test next year, and that you had at least one 31-day block plus 75% of days from that block to year-end (treating up to 5 absences as days present). An expat who arrived on November 1 stayed 46 of the 61 days remaining (75.4%), and later met the SPT, so he made the election and is a resident from November on.
- Expatriation: Expatriation or giving up residence triggers special rules. In the year you renounce US citizenship or abandon long-term resident status, you file a dual-status return and must file Form 8854 to certify tax compliance for the 5 prior years. If you become a “covered expatriate,” the IRS treats your worldwide assets as sold the day before expatriation and taxes gains above $890,000 (2025 exclusion) on the deemed sale.
- Closer connection exception: The closer connection exception lets someone who meets the substantial presence test still be treated as a nonresident if they maintain a tax home abroad, keep stronger ties to a foreign country than to the US, and file Form 8840 by the return deadline. Even a person with 180 days in the US might qualify under this exception, avoiding dual status.
Resident and nonresident tax differences at a glance
Every shift in residency brings a change in how the IRS sees your income. A dual-status taxpayer moves between two systems in one year: one that captures worldwide income and another that focuses only on what’s tied to the United States. The difference shows up clearly in how earnings, deductions, and credits are handled.
| Aspect | Resident period | Nonresident period |
|---|---|---|
| Income taxed | Worldwide income. | US-sourced income and ECI; FDAP generally 30% unless a treaty reduces it. |
| Deductions allowed | No standard deduction in a dual status year; itemize under Schedule A for Form 1040. | No standard deduction; limited Schedule A items for Form 1040 NR, such as state and local income taxes, gifts to US charities, casualty losses; deductions allowed only against ECI. |
| Credits allowed | Most credits may apply to the resident portion when eligibility is met, including the foreign tax credit. | Credits are limited on Form 1040 NR; no earned income credit, premium tax credit only in specified cases. |
| Return type | Form 1040 as the main return when resident on Dec 31, or attached as a Dual Status Statement otherwise. | Form 1040 NR is the main return when a nonresident on Dec 31, or attached as a Dual Status Statement otherwise. |
What are the steps to filing taxes as a dual-status alien?
Filing as a dual-status taxpayer can seem complicated, but once the timeline and paperwork fall into place, it becomes much easier to navigate. Each step connects naturally, helping you separate your resident and nonresident income while keeping your records clear and compliant.
Step 1: The process starts by identifying your residency periods. Using the green card or substantial presence tests confirms when you were a resident and when you were not, which determines how worldwide income is reported and where each type of income belongs.
Step 2: After defining your residency dates, decide which form serves as your main return. Residents on December 31 typically file Form 1040 as the main return, while nonresidents on that date complete Form 1040 NR as their primary filing.
Step 3: Prepare the Dual-Status Statement to accompany the main form. This attachment covers the opposite portion of the year and includes any US-sourced income earned during the nonresident period, making your filing complete and transparent.
Step 4: Label both parts clearly so the IRS can identify them as one package. Write “Dual-Status Return” across the main form and “Dual-Status Statement” across the attachment before submitting.
What are the tax deadlines and extensions?
Deadlines depend on your status at the end of the year. A resident at year's end follows the April 15 tax deadline, the same as most individual filers. A nonresident at year's end generally files Form 1040-NR by June 15, especially if no wages were subject to US withholding, though verifying the exact filing deadline each year is essential.
NOTE! Form 4868 provides an automatic extension to October 15, giving you more time to file but not to pay. Form 2350, on the other hand, offers an extra extension specifically for taxpayers abroad who expect to qualify for the foreign earned income exclusion but need additional time to meet the bona fide residence or physical presence tests.
Claim tax treaty relief to aid with your dual status
When income comes from more than one country, it makes navigating taxes as a dual-status alien feel complex, which is why tax treaties make a real difference by preventing double taxation and often lowering the tax you owe.
- US-UK tax treaty: During the nonresident period, US-source dividends can be 0 percent when a UK parent owns 80 percent for 12 months and meets the limitation on benefits. A 5 percent rate applies at 10 percent ownership, and 15 percent otherwise. During the resident period, the saving clause generally blocks a reduction.
- US-Canada tax treaty: While nonresident, most cross-border interest from US payers is exempt at source under the 2008 protocol, with carve-outs for participating or non-arm’s-length interest. Royalties are generally 10 percent, though software, patents, and similar items may be taxed only in the residence state, while film and television remain taxable at source. When a resident, the saving clause usually limits relief.
- US-India tax treaty: For the nonresident window, dividends are 15 percent for parent-to-subsidiary and 25 percent otherwise. Interest is 10 percent for banks and similar lenders and 15 percent in other cases. Royalties and fees for included services are generally 15 percent after the first five years. During the resident period, the saving clause typically prevents a reduction.
NOTE! Each tax treaty sets its own rules, so reading the relevant article for your situation is essential before relying on any reduction. Every treaty country can define its own ownership thresholds, special exemptions, and disclosure requirements that determine whether relief applies.
Always check the current treaty rate before instructing a payer to withhold less tax at source, and when claiming treaty benefits, the correct paperwork matters, so provide Form W-8BEN or W-8BEN-E for passive income, or Form 8233 for personal services, along with a valid taxpayer identification number. Without a valid claim, the standard 30 percent withholding applies automatically.
If you rely on a treaty article to reduce tax, disclose that position by attaching Form 8833 to your tax return. Keeping the article reference and supporting documents on hand ensures smooth processing and full compliance.
Married filing choices in dual status
Married to a US citizen and navigating a dual status year can feel complex, yet one key election can make the process smoother. The decision also determines eligibility for the married filing status and what income must be reported.
- A nonresident alien spouse election under section 6013(g) or 6013(h) treats both spouses as residents for the full year, requiring a signed statement attached to the first return it applies to.
- In the first year of the election, the couple must file a joint return, and in later years, they may choose to file jointly or separately unless the election ends or is suspended.
- Filing jointly under this choice brings worldwide income for both spouses into scope, limits treaty benefits, and follows a one-time rule if the election ends, though an amended joint election is allowed within three years or two years from payment.
State filing rules can shape your alien tax report
Federal and state rules rarely move in lockstep. Most state tax return often ignores treaty benefits that ease federal taxes, meaning exclusions you claimed for federal purposes might be added back at the state level. California, New Jersey, and Arkansas are known for this.
Residency tests also vary. New York can treat you as a resident if you keep a permanent home and spend 184 days there, while states like New Mexico count 185 days and track partial days differently.
Income earned within another state can trigger nonresident withholding, so working briefly in places like Oregon or Georgia may still require a separate filing. Checking your state’s tax code before filing helps avoid double taxation and costly mistakes.
Common pitfalls dual-status aliens make
After walking through how to file taxes, understanding who counts as a dual status alien, and reviewing residency rules, it becomes clear that none of it matters if the common mistakes are ignored. These pitfalls can undo even the most careful preparation and turn a straightforward return into a stressful process.
- Choosing the wrong main return or accidentally signing the attached statement confuses processing and delays refunds. Overlooking international income reporting forms such as FBAR or FATCA can also create compliance issues that take months to resolve.
- Misreading your December 31 residency status often leads to the wrong form and missed deductions. Some married taxpayers can file a joint return through a section 6013 election, which treats both as full-year residents and simplifies how their income and credits are reported.
- Leaving out the dual status statement or forgetting to label it properly is one of the most frequent filing errors. The statement must always be attached, clearly titled, and left unsigned to meet IRS rules.
- Skipping treaty benefits can mean paying tax that an applicable tax treaty could have reduced or eliminated. Reviewing treaty provisions before filing ensures the correct sourcing of income and access to any reliefs available.
- Dual status filers face multiple timelines based on income type and where they live. April 15 applies to most, June 15 is common for those without wage withholding or with the automatic two-month extension, and Form 4868 can extend filing to October 15.
Everyday stories of dual-status taxpayers
Life doesn’t always fit neatly into tax boxes. Moving countries, changing visas, or giving up a green card can all split a tax year in two. These short stories show how those shifts play out for taxpayers – what forms they file, which income is taxed, and when deadlines matter.
- Anna moves to the US midyear. After arriving in July, she met the substantial presence test and was a dual-status taxpayer by December 31. Her main return was Form 1040 marked Dual-Status Return, with Form 1040-NR attached as her statement. Only her US-sourced income before arrival was taxed under nonresident rules; her worldwide income after arrival was taxed as a resident. Because her salary had withholding, her tax deadline fell on April 15, and she used Form 4868 to extend filing to October 15.
- Brian departs midyear and ends the year abroad. He left in June and didn’t meet residency tests for the rest of the year. His primary return became Form 1040-NR labeled Dual-Status Return, with Form 1040 attached as the statement. Income earned while abroad was ignored unless it was US-sourced income, such as rent from a US property. With no wages subject to withholding, his filing deadline was June 15, though Form 4868 could extend it to October.
- Carla gives up her green card. After surrendering it in September, she entered a dual-status year and filed Form 1040-NR as her main return, Form 1040 as the statement, and Form 8854 to confirm compliance. Once expatriated, only US-sourced income, often taxed at up to 30 percent, remained taxable. Her standard Form 1040-NR deadline applied: April 15 if wages were withheld, June 15 otherwise, with Form 4868 for extension.
Does any of the above apply to your case? Then, know that no matter where the year takes you, understanding which part of your income the IRS sees – and which form proves it – can make the difference between confusion and confidence.
Ready to make dual-status filing simple?
Filing as a dual-status alien means navigating both resident and nonresident tax rules in a single year, and even small missteps can lead to costly issues. With over 20 years of experience and more than 50,000 returns filed, Taxes for Expats (TFX) has mastered the complexities of global tax compliance.
Our team ensures your return is accurate, compliant, and fully optimized for every available credit. With a 90% client retention rate, TFX remains the trusted choice for American expats worldwide.
FAQ
Generally no. Joint filing is allowed only if you elect to be treated as US residents for the full year under the rules referenced in the IRS Publication 519.
It lets you start residency partway through the year when you meet a 31-day continuous presence plus the 75% test and become a resident under the substantial presence test the next year; a statement must be attached.
No, except for students or business apprentices from India under Article 21(2) of the US-India treaty.
Often no, and California expressly says treaty-exempt income is taxable for state purposes. Many states base their starting point on federal AGI yet still do not apply federal treaties.
File an amended return on Form 1040-X to correct Form 1040, 1040-SR, or 1040-NR; e-file is available for many amended returns. Follow the 1040-X instructions for timing and what to attach.
