Are dual-status aliens choosing to be treated as US residents for the entire year eligible for standard deduction and earned income credit?

[ahmad4343]

Hi Dave , 

I was on F-1 year 2023 till October 1st where I switched to H1B and since then I am paying FICA. What main form I should use Sprintax or Turbotax ?  should I use mainly Sprintax and fill also Turbotax? 

 This year 2024, I might receive green card and might not but I will become resident alien effectively on May 2nd 2024 ,  if I do not receive green card , can I still file 1040 Turbotax resident alien next year as I will be passing  substantial test at some point of year 2024 and still be eligible for standard deduction ? 

Note : I am a single filer.

[DaveF1006]

It depends.  According to the IRS, you can file as a US resident for 2023 if you make the first year choice election. First of all, to qualify for the first-year choice.

1. Be present in the United States for at least 31 days in a row in the current year (2023), and
2. Be present in the United States for at least 75% of the number of days following the 31-day period, beginning with the first day of the 31-day period and ending with the last day of the current year (2023). (For purposes of this 75% requirement, you can treat up to 5 days of absence from the United States as days of presence in the United States.)

You must attach a statement to Form 1040 to make the first-year choice. The statement must contain your name and address and specify the following:

• That you are making the first-year choice for the current year (2023).
• That you were not a U.S. resident in the prior year (2022). (You were non-resident because of the F-1 exemption).
• That you qualified as a U.S. resident under the substantial presence test in the following year (2024).
• The number of days of presence in the U.S. during the current year (2023).
• The date or dates of your 31-day period of presence and the period of continuous presence in the U.S. during the current year (2023).
• The date or dates of absence from the U.S. during the current year (2023), if any, that you are treating as days of presence under the first-year choice – see (2), above.

You cannot file Form 1040 or the statement for the current year (2022) until you meet the substantial presence test in the following year (2023). If you have not met the test for the following year (2023) as of April 15 of 2023 (the filing due date of the current year), you can request an extension of time for filing your Form 1040 for the current year (2023) until a reasonable period after you have met that test for the following year (2023).  

If you make this first year election, you will need to print and mail the return along with a detailed statement. 

If you do not choose the first year choice, you would file a 1040 NR because you will not qualify for the Substantial Presence Test (SPT) because the days that were exempted on your F-1 visa do not count toward the SPT. You will need to file with Sprint Tax if you make this choice. You will qualify to file as a US resident in 2024 however because you will meet the requirements of the SPT.

First Year Choice

[ahmad4343]

Thank you Dave , I was on H1B effective since October 1st 2023 which means I was paying FICA and I have not left US since then , if I opted for the first choice knowing that part of the year 2023  I was on F1 student visa , can I still claim the standard deduction and do not have to return the exclusions of FICA ? 

Does someone have to report the world wide income (FATCA) if they opted for the first choice even in the future if they left the US permanently ? 

[DaveF1006]

Yes, if you opt for the first year choice, you will need to report your world wide income on your tax return. These are also subject to FBAR and FATCA filing requirements. 

You can also claim the standard deduction for the entire year. Also according to Tax Expert Karen J2 in her post, "Elections to be treated as a Resident do not affect being subject to FICA, so there would not any retroactive FICA owed.  You must become a Resident on your own to fall out of the FICA exemption.

So it should not affect your FICA."

@ahmad4343 

[Vanessa A]

Yes. you would file normal in the situation you are stating. If everyone on the return has met the Green Card test, substantial presence test and everyone has their SSN valid for employment, then there would be no statements that needed to be attached to the return as you would all be considered US residents, so you would file your 1040 normal eligible for whichever credits and deductions, your income, marital status and dependents would allow you to take. 

[DaveF1006]

Yes, you can make the first year choice to be a US resident but there a certain conditions that apply.

You must attach a statement to Form 1040 to make the first-year choice. The statement must contain your name and address and specify the following:

• That you are making the first-year choice for the current year (2023).
• That you were not a U.S. resident in the prior year (2022).
• That you qualified as a U.S. resident under the substantial presence test in the following year (2024).
• The number of days of presence in the U.S. during the current year (2023).
• The date or dates of your 31-day period of presence and the period of continuous presence in the U.S. during the current year (2023).
• The date or dates of absence from the U.S. during the current year (2023), if any, that you are treating as days of presence under the first-year choice – see (2), above.

You cannot file Form 1040 or the statement for the current year (2023) until you meet the substantial presence test in the following year (2024). If you have not met the test for the following year (2023) as of April 15 of 2023 (the filing due date of the current year), you can request an extension of time for filing your Form 1040 for the current year (2023) until a reasonable period after you have met that test for the following year (2024). 

To request an extension, when you file your return, go to Tax Tools then Tools from the left menu and choose File an extension. you must file the extension by April 15, 2024.

@QandA1 

[DaveF1006]

Yes, they can make the first-year election as described above.

[DaveF1006]

Yes, a statement needs to be attached to make the first year election and the return needed to be printed and then mailed.  Are you saying that the return was filed already and they declared themselves as citizens for the full year?