Tuesday, January 10, 2017

Dual Status Aliens - Special Tax Return Filing Requirements

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Dual status aliens determine their residency status under both the Internal Revenue Code and tax treaties.  When you status changes in the middle of a year from a resident to a nonresident you must file a dual status tax return. This return includes a form 1040 for the part of the year you are a US resident and a 1040NR for the part of the year you are a nonresident. This usually occurs when you surrender your green card (permanent residency) or surrender your US Citizenship.

Dual Status Alien

If you change status during the current year-
Aliens who make such a change are Dual Status Aliens and must file a special tax return called a Dual Status Return as described in Publication 519, U.S. Tax Guide for Aliens.

Dual Status Alien - First Year Choice

If you are a Nonresident Alien who will become a Resident Alien under the Substantial Presence test in the year following this taxable year, you may elect to be treated as a Dual Status Alien for this taxable year and a Resident Alien for the next taxable year if you meet certain tests. Refer to the First Year Choice area, under Dual-Status Aliens, of Chapter 1 in Publication 519, U.S. Tax Guide for Aliens.

Tax Treaties

Most Tax Treaties contain an article which defines tax residency for purposes of the Tax Treaty. Tax residency determined under the residency article of a tax treaty may differ from the residency provisions of the Internal Revenue Code.

Dual Status Aliens Married to U.S. Citizens or Resident Aliens

A dual status alien married to a U.S. citizen or to a resident alien may elect to file a joint income tax return with his/her U.S. citizen or resident alien spouse. Refer to Nonresident Spouse Treated as a Resident.

These rules are complex.  We can help you prepare your dual status return or review one you prepare on your own or answer your questions. Email us at ddnelson@gmail.com 

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