What is a Dual-Status Taxpayer

A dual-status taxpayer is an IRS determination based upon the number of days a foreigner without US citizenship resides in the United States. These taxpayers meet the IRS criteria of being both a resident alien and non-resident alien in a single tax year. 

Breaking Down Dual-Status Taxpayer

A dual-status taxpayer is someone who is a resident alien and non-resident alien in the same tax year, which mostly occurs in the year the person enters or leaves the country. A resident alien does not have U.S. citizenship but resides in the country long enough to meet the IRS substantial presence test, and typically is here with a green card. A non-resident alien is a foreigner not in the United States long enough during the tax year to meet the substantial presence test.

As an example, Brigitta is an Austrian citizen who until this past tax year had never visited the US. She arrived with a Visa on June 10, 2017 and stayed for the remainder of the year. Because she was in the US for more than 183 days, she meets the requirements of the substantial presence test. Brigitta is a dual-status alien because she was both a non-resident alien and a resident alien in the same year. She is considered a non-resident alien from January 1 to June 10, and a resident alien for the remainder of the calendar year.

For that part of the year when dual-status taxpayers are classified as resident aliens, they are taxed on all forms of income. For the non-resident portion of the year, only domestic sources of income are taxed.  A non-resident alien can claim one withholding allowance on their payroll W-4 form, and possibly more if a resident of Canada, Mexico, South Korea or a U.S. national. 

Restrictions When Filing Dual-Status Tax Returns

Many of the benefits of being a U.S. citizen are not available to dual-status taxpayers. Notable among these are the inability to take the standard deduction on Form 1040, although certain itemized deductions are allowed. For instance, one can claim exemptions for a spouse and dependents for the portion of the year when the filing status was resident alien. But dual-status tax filers cannot file as a head of household or filing jointly with spouse, although the latter option is available if married to a US citizen by the last day of the tax year.

Which US tax form to file depends on what the alien status was on the last day of the year. It is important to write at the top of the tax form “Dual-Status Taxpayer.” The IRS has more information to assist with filing dual-status tax returns.