QUESTION: I came to the United States from India on September 23, 2024, on an H-1B visa. I will remain in the U.S. and work here throughout 2025. How do I make the First-Year Choice election?

ANSWER: You entered the U.S. on September 23, 2024, with an H-1B visa, and plan to remain in the U.S. throughout 2025. Because you were not in the U.S. for most of 2024, you will not meet the IRS Green Card Test or Substantial Presence Test (SPT) for 2024.

By default, this makes you a nonresident alien for 2024, but you may still be eligible to be taxed as a resident alien for part or all of the year by making certain elections.

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Option 1: File as a Nonresident Alien (Form 1040NR)

If you take no further action, you can file your 2024 tax return as a nonresident alien using Form 1040NR. You will only report and pay tax on your U.S.-source FDAP income and U.S Sourced Effectively Connected Income. However, this option limits your eligibility for most deductions and tax credits.

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Option 2: Make the First-Year Choice (Become Dual-Status Resident)

If you meet specific conditions, you may elect to be treated as a U.S. resident for part of 2024, starting from the day you arrived. This is known as the First-Year Choice.

What is Dual-Status?

If you make the First-Year Choice, you are treated as:

• A nonresident alien from January 1 to September 22, 2024
• A resident alien from September 23 to December 31, 2024

This dual classification results in a dual-status tax return, which combines nonresident and resident filing rules.

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Requirements to Make the First-Year Choice

You can make the First-Year Choice if:

1. You were physically present in the U.S. for at least 31 consecutive days in 2024, and
2. You were physically present in the U.S. for at least 75% of the days from the start of that 31-day period through the end of the year (up to 5 days of absence may count as days of presence), and
3. You meet the Substantial Presence Test in 2025, which typically happens after around 183 days of U.S. presence.

In your case:

• You were present from September 23 through December 31, 2024 (100 days total)
• You meet the 31-day and 75% conditions
• If you remain in the U.S. in 2025, you will likely meet the Substantial Presence Test by May 30, 2025

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How to Make the First-Year Choice

You cannot make the First-Year Choice until you meet the Substantial Presence Test in 2025. Therefore, follow these steps:

1. File Form 4868 by April 15, 2025, to extend your 2024 tax filing deadline.
2. After meeting the Substantial Presence Test in 2025, file your 2024 return using Form 1040.
3. Attach a signed statement to your return that includes:
   • A declaration that you are making the First-Year Choice for 2024
   • Confirmation that you were not a resident in 2023
   • A statement that you met the Substantial Presence Test in 2025
   • The number of days you were present in the U.S. in 2024 and 2025
   • The dates of your 31-day continuous presence period in 2024
   • The dates of any absences in 2024 you are counting as days of presence

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Limitations of Dual-Status Filing

Filing as a dual-status taxpayer comes with several restrictions:

• You cannot claim the standard deduction
• You cannot file a joint return with your spouse (unless you make another election-see below)
• You cannot use Head of Household status
• You are ineligible for most tax credits, including education credits, Earned Income Credit, and the Child and Dependent Care Credit
• If you are married, you must generally use Married Filing Separately status
• If you are unmarried, you must use Single filing status

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Option 3: Elect Full-Year Residency with Your Spouse (IRC § 6013(g) or (h))

If you are married at the end of 2024, you may choose to be taxed as a resident for the entire year by making an election under IRC Section 6013(g) or (h). This allows you to file jointly with your spouse and enjoy the full benefits of resident filing status.

When This Election Applies

You can make this election if:

• You are married as of December 31, 2024
• One spouse becomes a resident alien (via the First-Year Choice or Substantial Presence Test)
• The other spouse is a nonresident alien, or also becomes a resident later in the year
• Both spouses have valid Social Security Numbers (SSNs) or ITINs
• You file a joint return

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Making Both Elections Together

In many cases, both spouses may have been nonresident aliens for part of the year. If one spouse qualifies for the First-Year Choice, both may:

1. Make the First-Year Choice, becoming a dual-status taxpayer, and
2. Make the 6013(g) or (h) election to treat both spouses as full-year residents and file jointly

By combining these elections, you avoid dual-status limitations and become eligible for:

• The standard deduction
• Married Filing Jointly status
• Most tax credits available to residents
• Full access to resident tax brackets

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How to Make the Joint Resident Election

To make the 6013(g) or (h) election:

1. File a joint return on Form 1040
2. Attach a signed statement that includes:
   • A declaration that you are making the election under Section 6013(g) or (h)
   • Full names, addresses, and taxpayer identification numbers of both spouses
   • A statement agreeing to be taxed as U.S. residents for the entire year
   • If one spouse is deceased, include the name and contact of the executor

Refer to Treasury Regulation § 1.6013-6(a)(4) for the official requirements.

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Important Considerations

• Once made, the election applies to the current tax year and all future years unless revoked or terminated
• You must report worldwide income for the entire year
• You can claim the Foreign Tax Credit on Form 1116 to avoid double taxation on foreign income
• The election ends automatically in case of divorce, legal separation, or if neither spouse is a resident in a future year

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Summary of Your Filing Options for 2024

1. File Form 1040NR as a nonresident alien if you do not make any elections. You’ll only report U.S.-source income and face limited deductions and credits.
2. Make the First-Year Choice to be treated as a dual-status alien. You’ll be taxed as a resident starting from the day you arrived in the U.S., but face certain restrictions, such as no standard deduction or joint filing.
3. Make the First-Year Choice plus a 6013(g)/(h) election to be treated as a full-year resident and file jointly with your spouse. This option maximizes deductions and credits but requires reporting all worldwide income.