Dual status and substantial presence test

Question

In 2023, I was present in the US as an international student on a visa (and was considered a resident alien, having filed my first resident return a year prior). After I graduated, I returned to my home country and took a job there.

I don’t have a green card, but I passed the substantial presence test in 2023. Initially, I assumed that I could simply file a resident 2023 return. However, it recently came to my attention that there’s such a status as a dual-status alien, and that I might in fact be one, given that I left the county permanently in 2023. I was therefore wondering if I have a choice of whether to file a resident return or a dual status return? Simply filing a resident return (and claiming FTC) looks so much simpler, but I also don’t want to claim a standard deduction if I’m not entitled to it.

If this helps, I wasn’t considered a tax resident of my home country in 2023 (due to having spent less than 183 days there).

Would be grateful for any pointers!

Answer 1

Simply filing a resident return (and claiming FTC) looks so much simpler, but I also don’t want to claim a standard deduction if I’m not entitled to it.

Why not? If you're not entitled to it you can't claim it. If you're entitled to it - why not claim it?

Sometimes the simplest solution is to do what's the simplest. If you've satisfied the requirements to be considered full year resident and it is more advantageous for you to file a full year resident return with FTC for the income earned in your home country - then do that.

Answer 2

If you meet the Substantial Presence Test, then you are a resident alien for the whole year, unless the First Year of Residency or Last Year of Residency rules make you dual-status.

See the Publication 519 section on Last Year of Residency. It applies to you since you are a resident alien for 2023 and (presumably) a nonresident alien for 2024. It says that by default the residency termination date is December 31, 2023 (meaning resident alien for all of 2023), but you may qualify to use the date you left the US as an earlier residency termination date, if for the remainder of 2023, your tax home was in a foreign country, and you had a closer connection to that country. A statement is required to establish this earlier residency termination date.

It sounds like you probably don't qualify for the earlier residency termination date, because you said you weren't a tax resident of your home country for 2023. And even if you did qualify, it sounds like from the publication that using an earlier residency termination date is not mandatory, meaning you can choose to be a resident for the whole year if you wish.

Note that being a resident alien for all of 2023 would mean that you are subject to US taxes on your worldwide income for all of 2023 (including your job abroad after you left the US). You may be able to use the Foreign Earned Income Exclusion and/or Foreign Tax Credit to reduce some or all of the US tax on foreign income, but you would still need to report that income on your US taxes even if you use the exclusion and/or credit.