If you recently moved to the U.S. from India in 2025, you may not be considered a full-year tax resident. That means you’ll likely need to file a dual-status return — and most CPAs completely mess this up.
The Problem
Many Indian taxpayers who move to the U.S. mid-year end up overpaying taxes or incorrectly claiming credits they aren’t entitled to. Most tax software and even local tax preparers don’t know how to handle Form 1040 + 1040NR correctly. Worse — they fail to apply treaty benefits, leaving thousands on the table.
At Kewal Krishan & Co, we help Indian-origin taxpayers navigate U.S. tax rules with confidence. Our clients have saved between $10,000 to $50,000 in tax exposure using our dual-status planning. Multiplied over 10 years, that’s a $500,000+ financial swing.
Let’s decode the rules and show you how to file the right way.
What Is a Dual-Status Taxpayer?
When you move to the U.S. during the year — say, on an H-1B or L-1 visa — you’ll usually be a nonresident alien at the start of the year and become a resident alien later (after passing the Substantial Presence Test, per IRC §7701(b)(3)).
A dual-status taxpayer files:
- Form 1040 (resident) for the portion of the year after U.S. tax residency starts
- Form 1040NR (nonresident) as a statement for the earlier part of the year
IRS Forms You’ll Need
- Form 1040 – For your U.S.-source and worldwide income after becoming a resident
- Form 1040NR (Statement Only) – For income earned before becoming a resident
- Form 8843 – If you were on an F-1 or J-1 visa before
- Form 8938 / FBAR (FinCEN 114) – If you held foreign bank accounts or assets
- Form 1116 – To claim a Foreign Tax Credit for any Indian taxes paid
Example: Filing Dual-Status for 2025
Let’s say you moved to the U.S. from Bangalore on July 10, 2025 on an H-1B visa.
- You pass the Substantial Presence Test in September 2025
- From January to September, you were a nonresident alien
- From September to December, you became a resident alien
Income Earned:
- ₹8,00,000 salary in India (Jan–Jul)
- $40,000 U.S. salary (Jul–Dec)
Tax Treatment:
- India salary taxed under 1040NR (with Form 1116 for credit if taxed in India)
- U.S. salary taxed under 1040
Step-by-Step Compliance Guide (2025)
- Determine U.S. residency date
Use IRC §7701(b) and Form 8843 if applicable. - Prepare Form 1040
- Include only U.S.-source income post-residency date.
- Attach Schedule B, Schedule 1 if applicable.
- Attach Form 1040NR as a statement
- Report foreign income earned before becoming a resident.
- Add explanatory statement: “Filed as a dual-status return.”
- Do NOT use the standard deduction
- Dual-status filers can’t claim it (except married India residents under treaty).
- Treaty Elections (U.S.–India)
- Use Article 21 & Article 25 of the U.S.–India tax treaty to claim exemptions or credits.
- File FBAR (FinCEN Form 114)
- Mandatory if you held foreign bank accounts >$10,000 any time during 2025.
- Claim Foreign Tax Credit (Form 1116)
- Avoid double taxation on India income.
Conclusion
Filing a dual-status return is not a DIY task. If you just moved to the U.S. from India, your 2025 tax return has special rules — and failing to follow them can lead to audits, penalties, or overpayment.
Call-to-Action
Anshul Goyal, CPA EA FCA is a licensed Certified Public Accountant in the U.S., Enrolled Agent authorized to represent before the IRS, and a cross-border tax expert. He helps Indian-Americans and expats navigate dual-status returns, FBAR/FATCA, and IRS notices.
If you moved to the U.S. this year, get your return filed right. Talk to Anshul Goyal and discuss your tax strategy.
About Our CPA
Anshul Goyal is a CPA, EA, and Fellow Chartered Accountant. He focuses on helping Indian-origin taxpayers, founders, and investors stay compliant with both Indian and U.S. tax laws. His firm Kewal Krishan & Co. has been a trusted name for IRS filings, foreign disclosures, PFIC analysis, 5471 filings, and strategic tax savings.
Disclaimer
This blog is for informational purposes only and should not be considered legal or tax advice. Always consult a qualified tax professional to evaluate your unique circumstances. Tax laws change frequently and interpretations may vary.
Top 5 FAQs
1. Can I file jointly with my spouse under dual-status?
Only if you make a special election under IRC §6013(g) and your spouse had U.S. presence. Otherwise, joint filing is not allowed.
2. Do I get the standard deduction in a dual-status return?
No. Dual-status filers generally cannot claim the standard deduction.
3. Is Indian income before moving to the U.S. taxable here?
It depends. Usually, it’s not, but if received after becoming a resident, it might be taxable. Use IRC §451 to determine timing.
4. What if I failed to report foreign accounts during the year?
You may need to file FBAR and potentially use Streamlined Filing Procedures to fix past noncompliance.
5. Can TurboTax handle dual-status returns?
No. Most DIY software can’t file dual-status correctly. Use a CPA who understands cross-border tax.