Your US tax return in the year you move: two statuses in one year

The year you move to the USA, or leave it, is a split year for tax purposes. Up to a certain date you are a nonresident and a resident after it, or the other way round. That date follows its own rules, which need not have much to do with the date of your flight, and it decides which income the USA taxes. On top of that come elections that let you be treated as a resident for the whole year, and a return with its own restrictions. This page walks you through the year of the move in both directions.

When you move to the USA, you think about your visa, a home and schools. On the tax side, something happens in the first year that surprises many people: the IRS splits the year. Up to a certain date you are a nonresident alien and pay tax only on US income; from that date on you are a resident alien and pay tax on your worldwide income. When you leave, it works the other way round. The IRS calls this a dual-status year. Whether you become a resident at all depends on the green card or the Substantial Presence Test; how the test counts is explained on the page 1040 or 1040-NR. For the overview, see Filing a US tax return as a European. This page is about the year in between.

1Why the year you move is a tax year of its own

Under IRS Publication 519, different rules apply to the two parts of a dual-status year. For your period of residence, you are taxed on income from all sources. Foreign income is taxable if you receive it during that period, even if you earned it before. For your period as a nonresident, you are taxed only on US income and on income connected with a US business. Foreign income you receive as a nonresident is not taxable, even if you earned it during your period of residence.

That gives you a practical rule: what counts is the day the money arrives, not the day it was earned. Your December salary from your European employer that only lands in January after you have moved falls into your period of residence. A severance payment you receive before the start date does not. So if you are planning your move, look at the payment dates too. Income from US sources is taxable in both parts of the year unless the law or a treaty exempts it; treaty benefits generally apply only to your period as a nonresident.

2The start date when you arrive

When your residence begins depends on how you become a resident.

2.1With a green card

If you get a green card, you are a resident from the first day in the year you are in the USA as a lawful permanent resident. If you receive the green card abroad, you become a resident on your first day in the USA after that.

2.2Under the Substantial Presence Test

If you become a resident by counting days, for example on an L-1 or E-2, under § 7701(b)(2)(A) you are a resident from the first day you were in the USA in the year of the test. That can be a day long before the move: the February trip to look for a home, the business trip in March. This is where a rule helps that is written in the law yet little known. Up to ten days of actual presence do not count for the start date if, on those days, you had a closer connection to another country and your tax home there. You can combine days from several stays as long as they total no more than ten; a single continuous stay, however, counts in full or not at all. These days still count for the test itself. The IRS gives an example: someone who came for a business meeting from 6 to 10 January and moved on 1 March can use 1 March as the start date.

For the ten days, you file a signed statement under penalties of perjury with your name, address, taxpayer ID, visa, passport, your first and last day in the USA, the excluded days and the facts that establish the closer connection. Without this statement, your start date is your first day in the USA.

If you meet both tests in the same year, the earlier date applies. And if you were already a resident the year before, you are a resident from 1 January; there is no arrival year anymore.

3The end date when you leave, and the sailing permit

When you leave, the rule flips, and this is where the most common misconception lies: your residence does not end automatically when your plane takes off. Under § 7701(b)(2)(B) you are a resident until 31 December. An earlier end date, namely your last day in the USA, applies only if for the rest of the year your tax home is abroad, you have a closer connection there and you do not become a resident again the following year. Here too, up to ten days of visits do not count. The IRS gives an example: someone who lived in the USA from 1 March to 25 August and spent five days on vacation there in December can use 25 August as the end date.

The earlier end date when you leave also requires a statement under penalties of perjury. It gives your last day in the USA and the facts that establish your tax home and closer connection abroad, and it is filed with your return or, if you have no filing requirement, sent to the IRS in Austin by the 1040-NR deadline.

3.1If you hold a green card

With a green card, you remain a tax resident until you voluntarily surrender it to USCIS and give up your status, or it is taken from you. If you keep the green card and move back to Europe, you still have to report your worldwide income in the USA. If you held a green card in at least eight of the last 15 years, special expatriation tax rules apply when you give it up, and you file Form 8854. The details are on the pages Giving up your green card and Exit tax.

3.2The sailing permit

Before a planned long or permanent departure, most foreign nationals need a certificate from the IRS confirming that their taxes are paid: the sailing permit. You apply with Form 2063 or Form 1040-C at an IRS office, by appointment, at least two weeks and no more than 30 days before you leave. Form 2063 is enough if you had no taxable income in the year up to your departure and in the previous year, or if you were a resident and your departure does not jeopardize collection of the tax. Otherwise you use Form 1040-C, with a calculation and payment of the tax up to your departure date. Exempt are, among others, tourists on a B-2 visa and business travelers on a B-1 visa or the Visa Waiver Program who spend no more than 90 days a year in the USA. Important: the sailing permit does not replace the annual return, which you still file.

4The dual-status return

Which form you file depends on your status on 31 December.

• Resident at year end (year you arrive): Form 1040, with “Other” checked at the top and “Dual Status Return” written in. For the period before, you attach a statement, for example a Form 1040-NR marked “Dual Status Stmt”. The deadline is 15 April.
• Nonresident at year end (year you leave): Form 1040-NR marked “Dual Status Return”, with a Form 1040 as the statement for your period of residence. The deadline is 15 April if you had US wages with withholding, otherwise 15 June.

The return comes with restrictions you should know before you run the numbers:

• No standard deduction; you can only claim actual deductions.
• No joint return with your spouse and no head of household rates. Married filers use the married filing separately rates.
• Income from your nonresident period that is not connected with a US business, such as US dividends, is taxed at a flat 30% or the lower treaty rate, with no deductions.
• Education credits, the Earned Income Credit and other credits are only available if you elect to be a resident for the full year.
• You can claim the foreign tax credit with Form 1116 for your period of residence.
• A dual-status return for tax year 2025 cannot be e-filed; it goes by mail to the address for dual-status returns.

If you had no salary in the year you moved, only investment income, and need a US taxpayer number, you apply for it with your return; more on the page Applying for an ITIN. The dates are on the page US tax return deadlines.

5The elections: first-year choice and joint election

5.1First-year choice

If you arrive in the fall, you often won't meet the Substantial Presence Test in your first year and would be a nonresident for the whole year. That sounds attractive, but it can cost you deductions. Under § 7701(b)(4) you can choose to be treated as a resident for part of your arrival year if you were not a resident in that year or the year before, you meet the test the following year, you were in the US for at least 31 consecutive days in the arrival year, and you were present on at least 75 % of the days from the first of those days to the end of the year. Up to five days of absence count as presence. You are then a resident from the first day of those 31 days.

The election comes with a timing catch: you can only file once you have actually met the test in the following year. Until then, you extend with Form 4868 and pay tax as if you had been a nonresident all year. You can revoke the election only with the IRS's consent.

5.2The joint election for spouses

Married couples have two more options. Under § 6013(h), a spouse who is a nonresident at the start of the year and a resident at the end, and who is married to a US citizen or resident, can jointly elect with that spouse to be treated as a resident for the whole year. This also works if you both move together. Under § 6013(g), a couple in which one spouse is a resident at year end and the other is not can choose to treat the other spouse as a resident. Either way, you are taxed on both spouses' worldwide income for the full year, file jointly and avoid the restrictions of a dual-status year. The § 6013(h) election is available only once in a lifetime. The § 6013(g) election carries over to later years until one of you revokes it, and it rules out claiming treaty benefits to be treated as a nonresident.

Whether the election pays off depends on income: if your spouse earned a lot at home before the move, that income comes into the US return, with a credit for the tax paid at home. With modest income at home, the standard deduction and the joint rates often win out.

6The tax treaty in your moving year

7Back home in your moving year

Your home country splits the year too, but by its own rules.

In Switzerland, tax liability begins and ends under Art. 8 DBG on the day you move in or out. If it applies for only part of the year, Art. 40 para. 3 DBG taxes the income of that period, but the rate for regular income is set on the income annualized to twelve months.

For what else the move triggers back home, from deregistering to exit tax, the article Tax consequences in your home country gives you a first overview.

8What comes with your first full US year

Once the moving year is behind you, obligations kick in that many newcomers only notice in year two:

• Accounts back home. As a resident, you are a US person. If your accounts outside the US together exceed $10,000 at any point in the year, you report them to FinCEN on the FBAR, due 15 April with an automatic extension to 15 October.
• Funds back home. Under § 1297, a foreign company is a passive foreign investment company (PFIC) if at least 75 % of its gross income is passive or at least 50 % of its assets produce passive income. Foreign investment funds can fall under this, with their own taxation and their own reporting forms. Have your portfolio reviewed before you move; more on the PFICs and ETFs page.
• Estimated tax. If you have income without withholding, you pay in advance during the year; see Estimated tax payments with Form 1040-ES.

If you missed something in your moving year or later, the catching up on US tax returns page shows you the way back. And if you are planning your move, start with three dates: your first day in the US, the date of your first paycheck under the new job, and the day you give up your home back home. Almost everything else follows from those three dates.

In short

• In the year you arrive or leave, you are dual-status: taxed on worldwide income for the period you are a resident, and only on US income before or after.
• When you arrive, the key date is your first day in the US in the year you meet the test, or your first day with a green card; up to ten days don't count. When you leave, it is 31 December unless you document an earlier date with a statement.
• Resident at year end: Form 1040 with 1040-NR as a statement; nonresident: Form 1040-NR with 1040 as a statement. Without an election, there is no standard deduction and no joint return.
• With the First-Year Choice or the joint spousal election, all or part of the year becomes a resident year.
• Your home country has its own rules: in Switzerland, for example, the part year is taxed at the rate of annualized income.

How we help you

• Your US Tax ReturnForm 1040 or 1040-NR, handled in English.
• ITIN ExpressYour ITIN through our special procedure, no tax return needed.
• US Tax ConsultationYour US tax question, answered by people who know both sides.
• Streamlined FilingCatch up on missed US tax returns and FBARs through the Streamlined procedure.
• US taxes for US citizens abroadForm 1040, FBAR and Streamlined for US citizens living in Europe.