Your First Year: Dual Status and the First-Year Choice

The year you arrive is the hardest tax year you will have in the US. You may be a nonresident for part of it and a resident for the rest, a combination the IRS calls dual status, with its own restrictions. Or you may miss the residency test altogether and still be able to choose resident treatment for part of the year. Married newcomers have one more choice that can change the bill a great deal. This chapter explains which first year you are having, the choices available, and how to file it.

When residency starts

If you meet the substantial presence test for a year and were not a resident at any time the year before, you are a resident only from your residency starting date. Publication 519 sets that date as the first day you were present in the US during the year. For the months before it you are a nonresident alien.

Short earlier trips can be left out. You may disregard up to 10 days of presence (for example, a house-hunting visit in January before moving in March) if on those days your tax home was in a foreign country and you had a closer connection to it. You must attach a signed statement to your return listing the dates; without it, your first day of presence becomes your starting date.

The green card has its own starting rule: the first day of the year you are present as a lawful permanent resident.

The dual-status year

Someone who arrives during the year, meets the test, and was not a resident the year before has a dual-status year: nonresident before the starting date, resident after. The same applies in reverse in the year you leave.

Publication 519 attaches several restrictions to a dual-status return:

• No standard deduction. You can itemize allowable deductions, but the standard deduction is not available for the year.
• No joint return, unless you and your spouse make the choice described below.
• No head of household rates, and a married person must use the married filing separately rates.
• The form. If you are a resident on December 31, you file Form 1040 marked "Dual-Status Return" and attach a statement, which can be a Form 1040-NR, showing the income from your nonresident period. If you are a nonresident on December 31, it is the other way round.
• Paper filing. Publication 519 says dual-status returns for tax year 2025 cannot be filed electronically. Check the current edition for later years.

During the resident part of the year you report worldwide income; during the nonresident part, mainly US-source income. Income such as interest from a home-country account earned before you arrived is generally outside the US return.

Arriving late in the year: the first-year choice

Someone who arrives in the autumn often does not meet the test in the first year, and so is a nonresident for the whole year, with no standard deduction.

Arriving on November 1 gives 61 days. Meets the test: no.

If that person will meet the test the following year, Publication 519 lets them make the first-year choice: to be treated as a resident from part-way through the arrival year. The conditions are:

1. you did not meet either test in the arrival year or the year before, and did not make this choice for the year before;
2. you meet the substantial presence test for the following year;
3. you were present in the arrival year for at least 31 days in a row; and
4. from the first of those 31 days to December 31, you were present on at least 75% of the days, counting up to 5 days of absence as days of presence.

Your residency then starts on the first day of that 31-day period. The year becomes a dual-status year, with the restrictions above. You make the choice with a statement attached to Form 1040, and you cannot file until you have actually met the test in the following year, so people making it usually request an extension on Form 4868 and pay the tax they expect to owe as a nonresident by April 15. Once made, the choice cannot be revoked without IRS approval.

Why bother? It is often worth it for a married person, because it opens the door to the next choice.

Married? Choosing resident status for the whole year

Publication 519 offers a stronger choice to a married couple. If you were a nonresident at the start of the year, are a resident (or citizen) at the end, and are married at year end to a citizen or resident, you and your spouse together may choose to be treated as US residents for the entire year. This includes the common case where both spouses arrive together and both become residents during the year.

The effects:

• you file a joint Form 1040 for that year, with the joint brackets and the joint standard deduction;
• the dual-status restrictions above no longer apply;
• both of you are taxed on worldwide income for the whole year, including income earned abroad before you arrived;
• neither of you can make this choice again for any later year.

For a household where one spouse earns the US salary, the joint return often lowers the tax substantially:

On $90,000 of wages, the joint return takes the $32,200 standard deduction and leaves $57,800 of taxable income, with federal income tax of $6,440. Without the choice, the same wages would be taxed at the married filing separately rates with no standard deduction at all. The trade-off is worldwide income: if either spouse had significant income abroad that year, it is now on the US return, and the foreign tax credit becomes part of the calculation.

A related election, treating a nonresident spouse as a resident when only one of you lives in the US, is covered by the nonresident spouse joint filing calculator and in Volume 2.

The year you leave

The last year mirrors the first. If you are not a resident at any time in the following year, your residency normally ends on December 31. Publication 519 allows an earlier termination date, the last day you were present, if for the rest of the year your tax home was abroad and you had a closer connection to that country; up to 10 days of later visits can be disregarded. Leaving well is the subject of Volume 3 on this shelf.