Dual-status or resident alien while leaving the US
I've been in the US on an H1 for 5 years and left the US in Apr 2007. By the substantial presence test, I can file as a resident (married-filing-jointly). Alternatively, I can file as dual-status, and I am trying to decide which makes sense:
Dual Status alien: Only income until Apr counts, but it appears that I have to file married-filing-separately, with no exemptions/dependents. Is this correct ?
As a dual-status alien, how is income from stocks, received after Apr 2007 treated ? Is it not taxed in the US ?
Resident: This will imply inclusion of rest-of the year indian salary, but due to the foreign tax credit, this might not be too much worse than not including it. In this case, all stock gain/loss through the entire year will count as income - is that correct ?