Pub 519 Page 9:

What is the purpose of first year choice? I mean how would it help a taxpayer?

Also in the example if Juan DaSilva is considered resident from Nov 1, 2010 then will he be taxed on worldwide income he earned **before** Nov 1, 2010 or only on worldwide income he earned **after** Nov 1, 2010? Can you please clarify ?

Thanks,

Can someone please clarify? AtlantaTaxExpert / MuktaA?
Thanks!

If anyone files resident return, he/she must report worldwide income for the full year.

Mukta, I disagree with that blanket statement. If Juan follows instructions under "First Year Choice" on page 9 of Pub 519 then:

1. He is a dual status alien.
2. Non resident before Nov 1 , 2011 (files 1040 NR/EZ) and resident after Nov 1, 2011 (files 1040).
3. He will report any income as per the rules under "Income subject to tax" on page 34 of Pub 519. I am quoting form there:

"For the part of the year you are a resident alien, you are taxed on income from all sources. Income from sources outside the United States is taxable if you receive it while you are a resident alien. The income is taxable even if you earned it while you were a nonresident alien or if you became a nonresident alien after receiving it and before the end of the year."

So I agree, he will have to report any worldwide income he **receives** after Nov 1 , 2011. This includes worldwide income he **receives** after Nov 1, 2011 but **earned** before Nov 1, 2011.

But this **excludes** any worldwide income he earned and received before Nov 1, 2011.

First year choice has two options:
1. Nonmarried person can choose to file dual status tax return.
2. Married person can choose to file dual status tax return or choose to file joint return as residents.
What you are talking is dual status return, while what I said is for resident return.

Regarding your point #2:

A married person (who is otherwise a dual status alien) can chose to be treated as a resident for the entire year only if he/she is married and he/she became a US citizen or got a Green Card.

And yes, I was specifically interested in how Juan's worldwide income will be treated in the example given. Thanks!