Dual-Status Alien or resident alien for the full year?

[suaadfan]

Hi,

My husband, my son and I became U.S. residents in Aug 2021. We had $0 in U.S. sourced income for the whole year of 2021 and only have income from our job at the foreign country, which we obviously already pay taxes for. Our most substantial expenses that could be potential tax deductions are school tuition for my son, along with property taxes for our U.S. home.

1. Do we have the option to file as dual-status aliens (married filing separately) OR simply as resident alien (married filing jointly)for the whole year? This matters as dual-status aliens have many restrictions such as not being able to file jointly and minimal deductions. Which would be the better decision given our income and expenses?

2.  If my husband and I were to file as dual-status aliens (separately), would I still be able to claim foreign tax credit for the portion of the foreign income we already paid taxes on (Aug - Dec 2021)? What about claiming the educational expenses I spent on my child (my dependent) as deductions?

Thanks a lot in advance

[suaadfan]

Additionally, do we still need to file form 8938 and FBAR as dual-status aliens? 

[DaveF1006]

Yes, you do have FBAR requirements if you file a dual-status citizen. Please read this IRS link to determine whether or not you have a FBAR reporting requirement.

@suaadfan 

[suaadfan]

Thanks for your response! 

Would we be able to file jointly as married couples even though both of us are dual-status aliens for 2021? 

[ErnieS0]

Yes. The IRS says:

If you are a dual-status alien, you can choose to be treated as a US resident for the entire year if all of the following apply.
 

• You were a nonresident alien at the beginning of the year.
• You are a resident alien or U.S. citizen at the end of the year.
• You are married to a U.S. citizen or resident alien at the end of the year.
• Your spouse joins you in making the choice.

This includes situations in which both you and your spouse were nonresident aliens at the beginning of the tax year and both of you are resident aliens at the end of the tax year.

See: Choosing resident alien status