I am a Canadian citizen. I have worked with OPT status until June of 2006 in Michigan and switched to H1b and has been working in Maryland since July 2006. I filed as 1040NR in 2005 but I do not know how I should handle this year. The portion of 2006 where I was non-resident alien had only my Federal tax withheld. However, W-2 issued during the portion of 2006 (from July to December 2006 with H1b status) shows both federal and social security wages being withheld.

How should I file the tax? Am I still non-resident or dual status? If I am still non-resident, what should I do about all the taxes that has been withheld between July and December 2006?

I need to know the EXACT date your H-1B went into effect.

If it become effective on or before 1 July 2006, then you MUST file as a dual-status alien, because then you met the Substantial Presence Test prior to 31 Dec 06.

If it became effective on or after 2 July 2006, then you CAN file as dual-status, but you may still file as a non-resident alien.

The taxes will probably be the same either way, and the non-resident alien option is much easier to file!