The number of immigrants in the US continues to increase every year. Others have successfully become US citizens, acquired green cards, and can now legally live and work in the country for good. On the other hand, some people temporarily stay in the US for various purposes, like for business, education, or seeking more opportunities for career growth.
However, one of the challenges these foreign nationals face while staying in the US is determining their residency status and knowing their tax liability. Others can either be a resident or non-resident alien for tax purposes, but some can also be both. With that, check this article to know more about dual-status citizens in the US and see their rights and opportunities as foreign nationals staying in the country.
Who are the Dual-Status Aliens?
In the same tax year, a foreign national temporarily living in the US can be an alien with two different statuses of residency for tax purposes. It’s not about an alien’s citizenship. However, it only refers to the residency status of an individual to see what particular taxes they are entitled to process while staying in the country.
Hence, if you’re one of those dual-status citizens who want to know your income tax liabilities, they’ll follow different guidelines for being a non-resident and resident alien in the US within the same dual-status tax year. That’s why you’ll only be paying taxes from your earnings in the country for being a non-resident alien. However, if you qualify for the substantial presence test and become a resident alien, that’s the time when you’re entitled to taxes from all income-generating sources both in the US and your native country.
What is an Example of Being Dual-Status Aliens?
Being one of those dual-status citizens will usually happen when a non-resident or resident alien enters and leaves the country in the same year. You could be one if you were a non-resident alien in the half part of the year. After that, if you’ve then successfully met the requirements for the substantial presence test, you’ve become a citizen or resident alien in the remaining third and fourth quarters in the same dual-status tax year.
For example, you’re an Australian citizen, and you arrived in the US on August 1, 2018, and you left the country on December 31, 2018. Then, you’ve met the requirements for the substantial presence test because you have at least a total of 183 days of staying in the US in a three-year period. That means from January 1 to July 31 in 2018, you were a non-resident alien in the US, and in that part of the year, from August 1 to December 31, you became a citizen or resident alien in the country. Hence, that makes you a dual-status citizen in the same tax year.
Can Dual-Status Get a Stimulus Check?
A stimulus check is a financial support from the government to unmarried adults in the US who are working with $75,000 as their gross income and will receive a stimulus check amounting to $1,200. It’s also for married couples who will receive $2,400 and get another $500 for every child they have under 17 years old. Moreover, the stimulus check is for people working with low income, who are employed, can’t go to work for various reasons, or those who have retired due to old age.
All people in the US can get the stimulus check, as long as they have a Social Security number and qualify for these stimulus payments while working and staying in the country. That includes a resident and non-resident alien in the US. Besides that, if you’ve successfully updated your residency status after you got a Social Security number, you have to update your records in the Internal Revenue Service so that you can still receive your stimulus payments if you qualify for it.
Hence, there are particular requirements for a person to get a stimulus check no matter the residency status as long as they’ve met the requirements. That’s why even if you are a dual-status citizen, you can still be eligible for the stimulus check.
What is a Dual-Status Citizen First-Year Choice?
If you haven’t met the requirements for the substantial presence test and green card test for the three-year period, you’ve successfully passed the SPT in the current year when you arrived in the country in the third quarter and left at the end of the same year. It means that you’ve become a non-resident alien in a particular part of the year but became a resident alien in the remaining days of the year, making you one of those dual-status aliens in the same tax year.
Moreover, to make this dual-status citizen first-year choice, you need to have a physical presence in the country for at least 31 days in the current year. Besides that, you also need to have a physical presence for at least 75 percent of the summation of days you’ve stayed in the US following the 31-day period until the end of the year.
First-Year Choice Statement Sample for Dual-Status Citizens
For making the first choice, you’ll become a resident alien in the country for the remaining part of the year if your residency starts on the first day of the 31-day period and you qualify for the choice. Moreover, you’ll also have your starting date of residency on the first day of the 31-day period if you have a physical presence in the country for more than 31 days.
For example, you’re from a particular country in Europe, and you went to the US for the first time. Let’s suppose that your arrival in the foreign country was on November 1, 2019, and you left the US on December 1 of the same year. It means that you were in the country for 31 days straight before going back to your home country. However, you went back to the US on December 19 in the same year and stayed there for the rest of the year. Hence, in the following year, 2020, you became a resident alien in the country for the SPT.
Moreover, you can make the first-year choice for your stay in the US in 2019 for a 31-day period from November 1 to December 1. As a result, you can have your starting date of residency in the US on November 1, 2019, when you make the first-year choice and meet all of the requirements.
Dual-Status Substantial Presence Test
As mentioned earlier, you can be a non-resident alien in the country and be a resident alien for tax purposes in the same year, making you a dual-status citizen. However, you have to process them separately in the IRS because you have to provide a different set of requirements for being a non-resident and resident alien in the US for the same tax year. As long as you’ve met the requirements for the substantial presence test, you’ll have US tax liability whenever you’ve successfully become a resident alien in the country.
As a non-resident or resident alien staying in the US, you have to determine your residency status to see your US tax liability. Doing so will make you understand what steps you have to take next, even if you’re a resident or non-resident alien in the US for tax purposes, or you can be a dual-status citizen. Always remember that being a dual-status citizen in the country has a different way of processing your dual-status tax return in the IRS. That’s why you have to follow these processes and prepare all necessary papers and documents.