Taxation of Dual-Status Aliens

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What Is a Dual-Status Alien?

A person is considered a "dual-status alien" when they have been both a resident alien and a nonresident alien in the same tax year. Dual status is only used for tax purposes in the United States. In determining your U.S. income tax liability for a dual-status tax year, different rules apply for the part of the year you are a resident of the United States and the part of the year you are a nonresident. Usually, dual-status tax years occur the years of arrival and departure.

How Am I Taxed as a Resident Alien?

For the part of the year that you are a resident alien, you are taxed on income from all sources. Income from sources outside the United States is taxable if you receive it while you are a resident alien.

How Am I Taxed as a Nonresident Alien?

For the part of the year that you are a nonresident alien, you are taxed on income from U.S. sources only.

What about Income From Foreign Sources?

An income that you receive as a nonresident alien from foreign sources that are not "effectively connected" with a business in U.S. is not taxable. The income is not taxable even if you earned it while you were a resident alien or if you became a resident alien or a U.S. citizen after receiving it and before the end of the year.

What about Income From American Sources?

Almost all income from U.S. sources is taxable, regardless of whether you are a nonresident alien or a resident alien. However, sometimes, there is a specific exemption under the Internal Revenue Code or a tax treaty.

What If I Have a Dual-Status Alien Tax Problem?

If you were a dual-status alien for a tax year and have problems, a tax lawyer may be able to advise you about your options. Tax law by itself is a difficult area of law, so you should not try taking chances with international tax law.

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Last Modified: 11-18-2014 11:57 AM PST

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