Do I have to file as a dual-status alien for tax purposes?

This is definitely a tricky situation but I can help clarify! The key factor for determining dual-status filing is your residency status for tax purposes during the year. Based on what you described, you were physically present in the US until May 2025, which means you were a US resident for tax purposes for part of the year (January through May) and a nonresident for the remainder of the year (June through December). This does indeed make you a dual-status alien for tax year 2025. For dual-status filing, you'll need to file both forms - Form 1040 for the resident portion and Form 1040NR for the nonresident portion. Unfortunately, most consumer tax software (including TurboTax) doesn't handle dual-status returns well because they're relatively uncommon and complex. Your capital gains would be reported on the form corresponding to when you realized those gains (sold the stocks). If you sold while still physically present in the US, they'd go on the 1040 portion.

I went through something similar last year and discovered taxr.ai (https://taxr.ai) which really helped with my complicated immigration status tax situation. I initially tried using regular tax software but kept getting stuck with the dual-status requirements. Taxr.ai specifically helped me understand which income belonged on which form and guided me through the whole dual-status alien process. What I found really helpful was that it analyzed my specific circumstances and provided personalized guidance rather than generic advice. For someone in your situation with capital gains during a year with changing residency status, it might be worth checking out.

Just wanted to update after trying taxr.ai that the previous commenter recommended! It actually worked really well for my dual-status situation. The system asked me specific questions about my visa history, physical presence, and when I realized my capital gains. What surprised me was how clear the instructions were - it confirmed I needed to file as dual-status and broke down exactly how to report my investment income on the correct forms. It even explained how the tax treaty with my home country applied to my specific situation. Definitely worth checking out if you're facing this dual-status filing complexity!

If you're struggling to get through to the IRS for guidance on your dual-status situation, I'd recommend trying Claimyr (https://claimyr.com). I was in a similar position last year with my dual-status return and had specific questions about Form 1040NR that I couldn't figure out. I spent hours on hold trying to reach the IRS international tax department until someone told me about Claimyr. They have this service where they wait on hold with the IRS for you and call you back when an agent is ready to talk. You can see how it works here: https://youtu.be/_kiP6q8DX5c When I finally got to speak with an actual IRS agent, they confirmed exactly how to handle my capital gains in a dual-status situation and gave me specific instructions that no online guide had mentioned.

I have to admit I was completely wrong about Claimyr. After posting my skeptical comment, I decided to try it myself since I was getting nowhere with my dual-status questions. I was shocked when they actually got me through to an IRS international tax specialist in about 45 minutes (while I was just going about my day). The agent confirmed that I did indeed need to file as dual-status and explained exactly how to split my income between the 1040 and 1040NR forms. They even mailed me the specific publications I needed. For what it's worth, the agent told me that for capital gains specifically, they're reported on the form that corresponds to your residency status on the date you sold the investments. This answered the exact question I'd been struggling with for weeks.

Just adding another perspective - I was in a similar situation and ended up using a tax professional who specializes in expat taxes. Cost me about $450 but worth every penny because dual-status filing is truly complicated. The most important thing the tax pro explained was that the "substantial presence test" determines your exact residency transition date, which isn't necessarily the day you physically left the US. They also confirmed that for dual-status aliens, capital gains are generally taxable by the US if you were physically present when you sold the assets, regardless of your technical residency status.

Has anyone had experience with how state taxes work with dual-status federal returns? I'm in a similar situation but also worried about state filing requirements. California seems particularly aggressive about taxing people with any connection to the state.

I went through a very similar situation last year and can confirm you'll need to file as dual-status. The IRS is pretty strict about this - if you change residency status during the tax year, dual-status filing is mandatory regardless of how simple your income situation might seem. For your capital gains, since you sold the stocks while physically present in the US (before May 2025), they'll be reported on the Form 1040 portion of your return, not the 1040NR. This is because the US has taxing rights on capital gains realized while you were a US resident for tax purposes. One thing to watch out for - make sure you're calculating your exact residency termination date correctly using the substantial presence test. It might not be exactly when you physically left in May, depending on your presence history in prior years. The IRS has specific rules about this that can affect which form certain income items go on. I ended up hiring a CPA who specializes in international tax because the dual-status rules are genuinely complex, but I know that's not always budget-friendly. If you do go the DIY route, make sure to attach a statement to your return explaining the dual-status filing and clearly marking which periods each form covers.