What is a dual-status alien?

A dual-status alien is defined as an individual whose residency status changes within a tax year between that of a resident alien and a non-resident alien. This situation often arises when someone moves to or from the United States during the year, causing their tax obligations and filing requirements to vary based on the duration of their stay.

The concept is important because it affects how income is taxed in the U.S. For the portion of the year that the individual qualifies as a resident alien, they are taxed on worldwide income, while for the non-resident portion, they are typically taxed only on U.S.-sourced income. This distinction becomes crucial for proper tax preparation and compliance.

The other options do not align with the definition of a dual-status alien. For instance, a person who never resides in the USA is simply a non-resident alien and does not experience the duality of residency status. A non-resident citizen of the USA is a mischaracterization because U.S. citizenship does not inherently create dual status; it strictly defines citizenship. Lastly, a resident alien who has never lived outside the USA does not experience a change in status; thus, they wouldn't fit the definition of dual-status.