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Publication 570 Cat. No. 15118B Contents

What's New ...... 1 Department of the Tax Guide Reminders ...... 1 Treasury Internal Introduction ...... 3 Revenue for Individuals Service Chapter 1. Bona Fide Residence ..... 3 With Income Chapter 2. Possession Source Income ...... 7

From U.S. Chapter 3. Filing Information for Individuals in Certain U.S. Possessions ...... 11 Possessions American Samoa ...... 11 The Commonwealth of Puerto Rico ...... 13 The Commonwealth of the For use in preparing Northern Mariana Islands ..... 15 Guam ...... 17 2020 Returns The U.S. Virgin Islands ...... 18 Chapter 4. Filing U.S. Tax Returns ... 20

Chapter 5. Illustrated Examples .... 25

Chapter 6. How To Get Tax Help .... 30

Index ...... 33

Future Developments For the latest information about developments related to Pub. 570, such as legislation enacted after it was published, go to IRS.gov/Pub570.

What's New Coronavirus tax relief. Due to the global health emergency caused by the coronavirus, numerous forms of tax relief are now available. If you have self-employment income and you are required to pay self-employment tax, see the 2020 Form 1040-SS and its instructions for related changes. Additional provisions are dis- cussed under the relevant topics throughout this publication. Also, for more information, go to IRS.gov/coronavirus-tax-relief-and- economic-impact-payments. Standard deduction amount. For 2020, the standard deduction amount has increased for all filers. See Standard deduction amount, later. Maximum income subject to social security tax. For 2020, the maximum amount of self-employment income subject to social se- curity tax is $137,700. The amount will increase to $142,800 for 2021. Optional methods to figure net earnings. For 2020, the maximum income for using the optional methods is $5,640. This amount will in- crease to $5,880 for 2021.

Get forms and other information faster and easier at: • IRS.gov (English) • IRS.gov/Korean (한국어) • IRS.gov/Spanish (Español) • IRS.gov/Russian (Pусский) Reminders • IRS.gov/Chinese (中文) • IRS.gov/Vietnamese (TiếngViệt) Disaster tax relief. To find information on the most recent tax relief provisions for taxpayers

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affected by disaster situations see Tax Relief in nonrefundable credit of up to $500 for each eli- 90, 91, 92, 94, 95, 96, 97, 98, or 99 also expired Disaster Situations. See Pub. 547 for discus- gible dependent who can't be claimed for the at the end of 2020. Affected taxpayers who ex- sions on the special rules that apply to federally child tax credit. Bona fide residents of Puerto pect to file a tax return in 2021 must submit a declared disaster areas. Rico calculate the ACTC and credit for other renewal application. For more information on Automatic 60-day extension. Certain tax- dependents with the Additional Child Tax Credit how to renew an ITIN, go to IRS.gov/ITIN. Worksheet in the Instructions for Form payers affected by federally declared disasters ITINs with middle digits 70 through 87 1040-SS. may be eligible for an automatic 60-day exten- that expired in 2016, 2017, 2018, or sion for filing returns, paying taxes, and per- See the Instructions for Form 1040-SS for 2019 can also be renewed. forming other tasks required by the IRS. For more information. more information, see Pub. 547. If you are required to file Form 1040, see the Electronic filing. You can e-file Form Qualified opportunity zones (QOZs). The Instructions for Forms 1040 and 1040-SR for 1040-SS and Form 1040-PR. For general infor- Tax Cuts and Jobs Act (TCJA) amended the In- more information about the ACTC and credit for mation about electronic filing, visit IRS.gov/ ternal Revenue Code to encourage investments other dependents. Efile. in designated economically distressed com- Additional Medicare Tax. You may be re- Earned income credit (EIC). Generally, if you munities by providing income tax benefits to quired to pay Additional Medicare Tax. Also, are a bona fide resident of a U.S. territory, you taxpayers who invest new capital in businesses you may need to report Additional Medicare cannot claim the EIC on your U.S. tax return. located within QOZs. There are QOZs located Tax withheld by your employer. For more infor- However, certain U.S. territories may allow in the 50 states, the District of Columbia, Ameri- mation, see Additional Medicare Tax under bona fide residents to claim the EIC on their ter- can Samoa, the CNMI, Guam, Puerto Rico, and Special Rules for Completing Your U.S. Tax ritory tax return. the USVI. Return in chapter 4. To claim the EIC on your U.S. tax return, Bona fide residents of the CNMI, Guam, and Net Investment Income Tax. The Net Invest- your home (and your spouse's if filing a joint re- the USVI will generally report qualifying invest- ment Income Tax (NIIT) imposes a 3.8% tax on turn) must have been in the United States for ments on the income tax return they file with the lesser of an individual's net investment in- more than half the year. If you have a child, the their territory tax agency, while residents of come or the excess of the individual's modified child must have lived with you in the United American Samoa and Puerto Rico will report adjusted gross income over a specified thresh- States for more than half the year. For this pur- qualifying investments on their U.S. income tax old amount. Bona fide residents of Puerto Rico pose, the United States includes only the 50 return. For additional information, see the QOZ and American Samoa who have a federal in- states and the District of Columbia. Special FAQs at IRS.gov/newsroom/opportunity-zones- come tax return filing obligation may be liable rules apply to military personnel stationed out- frequently-asked-questions. Taxpayers should for the NIIT if the taxpayer's modified adjusted side the United States. For more information on also consult with their territory tax agency for gross income from non-territory sources ex- this credit, see Pub. 596. additional information. ceeds a specified threshold amount. Also, bona If you claim the earned income tax Taxpayer Advocate Service (TAS). TAS is fide residents must take into account any addi- credit (EITC) or the additional child tax an independent organization within the IRS that tional tax liability associated with the NIIT when credit (ACTC) on your tax return, the helps taxpayers and protects taxpayer rights. calculating their estimated tax payments. IRS must hold your refund until at least The phone numbers for the local advocate for The NIIT does not apply to any individual mid-February—including the portion not associ- the territories are: who is a nonresident alien with respect to the ated with the EITC or ACTC. To track your re- • American Samoa, the CNMI, and Guam: United States. For more information, see Net In- fund, go to IRS.gov/Refunds, or download the 808-566-2950 (in Hawaii); vestment Income Tax under Bona Fide Resi- IRS2Go mobile app. • Puerto Rico and the USVI: 787-522-8600 dent of American Samoa and Bona Fide Resi- for Spanish, and 787-522-8601 for English dent of Puerto Rico in chapter 3. Form 8938, Statement of Specified Foreign (in Puerto Rico). Because bona fide residents of the CNMI, Financial Assets. If you have specified foreign For more information, see chapter 6. Guam, and the U.S. Virgin Islands generally do financial assets in foreign jurisdictions valued above certain threshold dollar amounts, you Self-employment tax. Bona fide residents of not have a federal income tax return filing obli- gation, the NIIT generally does not directly ap- may have to file Form 8938 when you file your a U.S. territory who have self-employment in- U.S. income tax return with the IRS. come must generally pay self-employment tax ply to them. These residents should contact Even if you are required to file Form 8938, to the United States. Self-employment tax in- their local territorial tax department for guidance you may not have to report certain specified for- cludes both social security and Medicare. Bona on the possible mirrored application of the NIIT eign financial assets on Form 8938. See Bona fide residents may be subject to U.S. self-em- in these jurisdictions. fide resident of a U.S. possession in the Instruc- ployment tax even if they have no income tax fil- Individual taxpayer identification numbers tions for Form 8938 for more details. ing obligation with the United States. See (ITINs) for aliens. If you are a nonresident or Self-Employment Tax in chapter 4 for more in- resident alien and you do not have and are not Because bona fide residents of the formation. eligible to get a social security number (SSN), CNMI, Guam, and the USVI generally Additional child tax credit (ACTC). Bona you must apply for an ITIN. For details on how do not have a U.S. federal income tax fide residents of Puerto Rico claiming the ACTC to do so, see Form W-7 and the Instructions for return filing obligation, they generally are not re- should be aware of the following. Form W-7. Allow 7 weeks for the IRS to notify quired to file Form 8938 with the IRS. These • The maximum amount of the ACTC is you of your ITIN application status (9 to 11 residents should contact their local territorial tax $1,400 per qualifying child. weeks if submitted during peak processing peri- department for guidance on the possible mir- • Your qualifying child must have a social se- ods (January 15 through April 30) or if you are rored application of this reporting requirement curity number (SSN) valid for employment filing from overseas). If you already have an with these jurisdictions. issued prior to the due date of your 2020 ITIN, enter it wherever your SSN is requested Change of address. If you change your mail- return (including extensions), or you can’t on your tax return. ing address, use Form 8822 to notify the IRS claim the ACTC on either your original or For more information, go to IRS.gov/ITIN. and U.S. territory tax administration, if appropri- an amended tax return. An ITIN is for tax use only. It does not ate. Mail Form 8822 to the IRS Service Center Bona fide residents of territories other ! entitle you to social security benefits or or U.S. territory tax administration address des- TIP than Puerto Rico may be able to claim CAUTION change your employment or immigra- ignated for your old address (see page 2 of the ACTC on their territory income tax tion status under U.S. law. Form 8822). return. For more information, contact your terri- If you change your address before filing your tory tax agency. Expired ITIN. Generally, ITINs that have not been used on a federal tax return at least once tax return, write the new address in the appro- If you have a dependent who is not your in the last 3 consecutive years expired on De- priate boxes of your tax return when you file. child, you may be able to claim the credit for cember 31, 2020. ITINs with middle digits 88, Reporting a change of bona fide residence. other dependents. The credit is a and those issued before 2013 with middle digits If you became or cease to be a bona fide

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resident of a U.S. territory, you may need to file Information for individuals living or Form (and Instructions) Form 8898, Statement for Individuals Who Be- working in U.S. territories is available at

1040-PR 1040-PR Planilla para la Declaración de gin or End Bona Fide Residence in a U.S. Pos- IRS.gov/Individuals/International- la Contribución Federal sobre el session. For additional information, see Report- Taxpayers/Individuals-Living-or-Working-in-US- Trabajo por Cuenta Propia ing a Change in Bona Fide Residence in Possessions. (Incluyendo el Crédito Tributario chapter 1. If you need information on U.S. taxa- Adicional por Hijos para Residentes Photographs of missing children. The IRS is Bona Fide de Puerto Rico) a proud partner with the National Center for tion, write to:

Missing & Exploited Children® (NCMEC). Pho- 1040-SS 1040-SS U.S. Self-Employment Tax tographs of missing children selected by the Internal Revenue Service Return (Including the Additional Child Center may appear in this publication on pages International Section Tax Credit for Bona Fide Residents that would otherwise be blank. You can help Philadelphia, PA 19255-0725 of Puerto Rico) bring these children home by looking at the 1116 1116 Foreign Tax Credit photographs and calling 1-800-THE-LOST If you need additional information on your (1-800-843-5678) if you recognize a child. tax obligations in a U.S. territory, write to the tax 4563 4563 Exclusion of Income for Bona Fide department of that territory. Their addresses are Residents of American Samoa

Introduction provided in chapter 3 under the individual head- 4868 4868 Application for Automatic Extension ings for each territory. of Time To File U.S. Individual This publication discusses how to treat income Income Tax Return received from the following U.S. territories on Comments and suggestions. We welcome your tax return(s). your comments about this publication and your 5074 5074 Allocation of Individual Income Tax • American Samoa. suggestions for future editions. to Guam or the Commonwealth of the • The Commonwealth of Puerto Rico (Puerto You can send us comments through Northern Mariana Islands (CNMI) Rico). IRS.gov/FormComments. Or, you can write to 8938 8938 Statement of Specified Foreign • The Commonwealth of the Northern Ma- the Internal Revenue Service, Tax Forms and Financial Assets riana Islands (CNMI). Publications, 1111 Constitution Ave. NW, • Guam. IR-6526, Washington, DC 20224. 8689 8689 Allocation of Individual Income Tax • The U.S. Virgin Islands (USVI). Although we can’t respond individually to to the U.S. Virgin Islands

Unless stated otherwise, when the term each comment received, we do appreciate your 8898 8898 Statement for Individuals Who Begin “possession” or “territory” is used in this publi- feedback and will consider your comments and or End Bona Fide Residence in a cation, it includes the Commonwealths of Pu- suggestions as we revise our tax forms, instruc- U.S. Possession erto Rico and the Northern Mariana Islands. tions, and publications. Do not send tax ques-

8959 8959 Additional Medicare Tax Chapter 1 discusses the requirements for tions, tax returns, or payments to the above ad-

being considered a bona fide resident of the lis- dress. 8960 8960 Net Investment Income Tax—Individuals, Estates, and Trusts ted territories. Getting answers to your tax questions. Chapter 2 gives the rules for determining if If you have a tax question not answered by this your income is from sources within, or effec- publication or the How To Get Tax Help section tively connected with a trade or business in, at the end of this publication, go to the IRS In- those territories. teractive Tax Assistant page at IRS.gov/ Next, chapter 3 looks at the rules for filing Help/ITA where you can find topics by using the tax returns when you receive income from any search feature or viewing the categories listed. of these territories. You may have to file a U.S. 1. tax return only, a territory tax return only, or both Getting tax forms, instructions, and pub- returns. Generally, this depends on whether lications. Visit IRS.gov/Forms to download you are a bona fide resident of the territory. In current and prior-year forms, instructions, and some cases, you may have to file a U.S. return, publications. Bona Fide but will be able to exclude income earned in a territory from U.S. tax. You can find illustrated Ordering tax forms, instructions, and examples of some of the additional forms re- publications. Go to IRS.gov/OrderForms to Residence quired in chapter 5. order current forms, instructions, and publica- If you are not a bona fide resident of one of tions; call 800-829-3676 to order prior-year In order to qualify for certain tax benefits (see the territories listed earlier, or are otherwise re- forms and instructions. The IRS will process chapter 3), you must be a bona fide resident of quired to file a U.S. income tax return, the infor- your order for forms and publications as soon American Samoa, the CNMI, Guam, Puerto mation in chapter 4 will tell you how to file your as possible. Do not resubmit requests you’ve Rico, or the USVI for the tax year. U.S. tax return. This information also applies if already sent us. You can get forms and publica- Generally, you are a bona fide resident of one you have income from U.S. insular areas other tions faster online. of these territories (the relevant territory) if, dur- than the five territories listed earlier because To obtain tax forms required for your terri- ing the tax year, you: that income will not qualify for any of the exclu- tory tax return, contact the tax office in your ter- Meet the presence test, sions or other benefits discussed in chapter 3. ritory. See chapter 3 for more information. • Do not have a tax home outside the rele- These other U.S. insular areas include: • vant territory, and • Baker Island, Useful Items • Do not have a closer connection to the • Howland Island, You may want to see: United States or to a foreign country than • Jarvis Island, to the relevant territory. • Johnston Island, Publication Kingman Reef, • Special rule for members of the U.S. Armed

Midway Islands, 3 • 3 Armed Forces' Tax Guide Forces. If you are a member of the U.S. Armed Palmyra Atoll, and • Forces who qualified as a bona fide resident of Wake Island. 54 54 Tax Guide for U.S. Citizens and • the relevant territory in an earlier tax year, your Resident Aliens Abroad absence from that territory during the current tax year in compliance with military orders will 514 514 Foreign Tax Credit for Individuals not affect your status as a bona fide resident.

519 519 U.S. Tax Guide for Aliens Likewise, being in a territory solely in compli- ance with military orders will not qualify you for

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bona fide residency. Also see the special in- 5. You had no significant connection to the b. Does not apply for purposes of calcu- come source rule for members of the U.S. United States during the tax year. lating the minimum 60 days of pres- Armed Forces in chapter 2, under Compensa- ence in the relevant territory that is re- tion for Labor or Personal Services. Special rule for nonresident aliens. Condi- quired for the 549-day presence test tions (1) through (5) above do not apply to non- (see Presence Test, earlier). Special rule for civilian spouse of active resident aliens of the United States. Instead, duty member of the U.S. Armed Forces. If nonresident aliens must meet the substantial If, during a single day, you are physically you are the civilian spouse of an active duty presence test discussed in chapter 1 of Pub. present: service member, under Military Spouses Resi- 519. In that discussion, substitute the name of • In the United States and in the relevant ter- dency Relief Act (MSRRA) you can choose to the territory for “United States” and “U.S.” wher- ritory, that day is considered a day of pres- keep your prior residence or domicile for tax ever they appear. Disregard the discussion in ence in the relevant territory; or purposes (tax residence) when accompanying that chapter about a Closer Connection to a • In two territories, that day is considered a the service member spouse, who is relocating Foreign Country. day of presence in the territory where your under military orders, to a new military duty sta- tax home is located (see Tax Home, later). tion in one of the 50 states, the District of Co- lumbia, or a U.S. territory. Before relocating, Days of Presence in the you and your spouse must have the same tax United States or Relevant Days of presence in the United States. You residence. Territory are considered to be present in the United If you are a civilian spouse and choose to States on any day that you are physically keep your prior tax residence after such reloca- Generally, you are treated as being present in present in the United States at any time during tion, the source of income for services per- the United States or in the relevant territory on the day. However, do not count the following formed (for example, wages, salaries, tips, or any day that you are physically present in that days as days of presence in the United States. self-employment) by you is considered to be location at any time during the day. 1. Any day you are temporarily present in the (the jurisdiction of) the prior tax residence. As a United States in order to receive, or to ac- result, the amount of income tax withholding Days of presence in a territory. You are con- company a parent, spouse, or child who is (from Form(s) W-2) that you are able to claim sidered to be present in the relevant territory on receiving, qualifying medical treatment. on your federal return, as well as the need to file any of the following days. Child is defined in item 2c under Days of a state or U.S. territory return, may be affected. 1. Any day you are physically present in that presence in a territory, earlier. Qualifying The spouse of the service member territory at any time during the day. medical treatment is defined later. may elect to use the same residence TIP 2. Any day you are outside of the relevant 2. Any day you are temporarily present in the for tax purposes as the service mem- territory in order to receive, or to accom- United States because you leave or are ber regardless of the date on which the mar- pany any of the following family members unable to return to the relevant territory riage of the spouse and service member occur- to receive, qualifying medical treatment during any: red. (see Qualifying Medical Treatment, later). a. 14-day period within which a major For more information, see the following. a. Your parent. disaster occurs in the relevant territory • Notice 2010-30, available at IRS.gov/irb/ b. Your spouse. for which a Federal Emergency Man- 2010-18_IRB#NOT-2010-30. agement Agency (FEMA) notice of a • Notice 2011-16, available at IRS.gov/irb/ c. Your child, who is your son, daughter, federal declaration of a major disaster 2011-17_IRB#NOT-2011-16. stepson, or stepdaughter. This in- is issued in the Federal Register, or • Notice 2012-41, available at IRS.gov/irb/ cludes an adopted child or child law- 2012-26_IRB#NOT-2012-41. fully placed with you for legal adop- b. Period for which a mandatory evacua- tion order is in effect for the geo- Also, you can consult with state, local, or tion. This also includes a foster child graphic area in the relevant territory in U.S. territory tax authorities regarding your tax who is placed with you by an author- which your main home is located. obligations under MSRRA. ized placement agency or by judg- ment, decree, or other order of any 3. Any day you are in the United States for court of competent jurisdiction. less than 24 hours when you are traveling Presence Test 3. Any day you are outside the relevant terri- between two places outside the United tory because you leave or are unable to States. If you are a U.S. citizen or resident alien, you return to the relevant territory during any: 4. Any day you are temporarily present in the will satisfy the presence test for the tax year if United States as a professional athlete to you meet one of the following conditions. a. 14-day period within which a major disaster occurs in the relevant territory compete in a charitable sports event (de- 1. You were present in the relevant territory for which a Federal Emergency Man- fined later). for at least 183 days during the tax year. agement Agency (FEMA) notice of a 5. Any day you are temporarily in the United 2. You were present in the relevant territory federal declaration of a major disaster States as a student (defined later). is issued in the Federal Register, or for at least 549 days during the 3-year pe- 6. Any day you are in the United States serv- riod that includes the current tax year and b. Period for which a mandatory evacua- ing as an elected representative of the rel- the 2 immediately preceding tax years. tion order is in effect for the geo- evant territory, or serving full time as an During each year of the 3-year period, you graphic area in the relevant territory in elected or appointed official or employee must be present in the relevant territory for which your main home is located. of the government of that territory (or any at least 60 days. 4. Any day (up to a total of 30 days) that you of its political subdivisions). 3. You were present in the United States for are outside the relevant territory and the no more than 90 days during the tax year. United States for business or personal 4. You had earned income in the United travel, but this rule: Qualifying Medical Treatment States of no more than a total of $3,000 a. Applies only if the number of days you and were present for more days in the rel- are considered present in the relevant Such treatment is generally provided by (or un- evant territory than in the United States territory exceeds the number of days der the supervision of) a physician for an ill- during the tax year. Earned income is pay you are considered present in the Uni- ness, injury, impairment, or physical or mental for personal services performed, such as ted States (determined without regard condition. The treatment generally involves: wages, salaries, or professional fees. to the rule in this section (4)), and • Any period of inpatient care that requires an overnight stay in a hospital or hospice,

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and any period immediately before or after Student Exception for rental property. If you or that inpatient care to the extent it is medi- your spouse own the dwelling unit and at any cally necessary; or To qualify as a student, you must be, during time during the tax year it is rented to someone • Any temporary period of inpatient care in a some part of each of any 5 calendar months else at fair rental value, it will be considered residential medical care facility for medi- during the calendar year: your permanent home only if you or your cally necessary rehabilitation services. spouse use that property for personal purposes 1. A full-time student at a school that has a for more than the greater of: regular teaching staff, course of study, and With respect to each qualifying medical • 14 days, or regularly enrolled body of students in at- treatment, you must prepare (or obtain) and • 10% of the number of days during that tax tendance; or maintain documentation supporting your claim year that the property is rented to others at that such treatment meets the criteria to be con- 2. A student taking a full-time, on-farm train- a fair rental value. sidered days of presence in the relevant pos- ing course given by a school described in You are treated as using rental property for session. You must be able to produce this doc- (1) above or by a state, county, or local personal purposes on any day the property is umentation within 30 days if requested by the government agency. not being rented to someone else at fair rental IRS or tax administrator for the relevant posses- value for the entire day. sion. The 5 calendar months do not have to be A day of personal use of a dwelling unit is consecutive. also any day that the unit is used by any of the You must keep the following documentation. following persons. Full-time student. A full-time student is a per- 1. Records that provide: • You or any other person who has an inter- son who is enrolled for the number of hours or est in it, unless you rent it to another owner a. The patient's name and relationship to courses the school considers to be full-time at- as his or her main home under a shared you (if the medical treatment is provi- tendance. However, school attendance exclu- equity financing agreement. ded to a person you accompany); sively at night is not considered full-time attend- • A member of your family or a member of ance. b. The name and address of the hospi- the family of any other person who has an tal, hospice, or residential medical interest in it, unless the family member School. The term “school” includes elementary care facility where the medical treat- uses the dwelling unit as his or her main schools, middle schools, junior and senior high ment was provided; home and pays a fair rental price. Family schools, colleges, universities, and technical, includes only brothers and sisters, trade, and mechanical schools. It does not in- c. The name, address, and telephone half-brothers and half-sisters, spouses, an- clude on-the-job training courses, correspond- number of the physician who provided cestors (parents, grandparents, etc.), and ence schools, and schools offering courses the medical treatment; lineal descendants (children, grandchil- only through the Internet. d. The date(s) on which the medical dren, etc.). treatment was provided; and • Anyone under an arrangement that lets Significant Connection you use some other dwelling unit. e. Receipt(s) of payment for the medical • Anyone at less than a fair rental price. treatment. One way in which you can meet the presence However, any day you spend working sub- 2. Signed certification by the providing or su- test is to have no significant connection to the stantially full time repairing and maintaining (not pervising physician that the medical treat- United States during the tax year. This section improving) your property is not counted as a ment met the requirements for being quali- looks at the factors that determine if a signifi- day of personal use. Whether your property is fied medical treatment, and setting forth: cant connection exists. used mainly for this purpose is determined in light of all the facts and circumstances, such as: a. The patient's name, You are treated as having a significant con- The amount of time you devote to repair nection to the United States if you: • b. A reasonably detailed description of and maintenance work, the medical treatment provided by (or 1. Have a permanent home in the United • How often during the tax year you perform under the supervision of) the physi- States; repair and maintenance work on this prop- cian, erty, and 2. Are currently registered to vote in any po- The presence and activities of compan- c. The dates on which the medical treat- litical subdivision of the United States; or • ment was provided, and ions. 3. Have a spouse or child (see item 2c under See Pub. 527 for more information about d. The medical facts that support the Days of presence in a territory, earlier) personal use of a dwelling unit. physician's certification and determi- who is under age 18 whose main home is nation that the treatment was medi- in the United States, other than: cally necessary. Example—no significant U.S. connec- a. A child who is in the United States be- tion. Ann Green, a U.S. citizen, is a sales rep- cause he or she is the child of di- resentative for a company based in Guam. Ann vorced or legally separated parents lives with her spouse and young children in their Charitable Sports Event and is living with a custodial parent house in Guam, where she is also registered to under a custodial decree or multiple vote. Her business travel requires her to spend A charitable sports event is one that meets all of support agreement, or 120 days in the United States and another 120 the following conditions. days in foreign countries. When traveling on b. A child who is in the United States as business, Ann generally stays at hotels but • The main purpose is to benefit a qualified a student. charitable organization. sometimes stays with her brother, who lives in • The entire net proceeds go to charity. For the purpose of determining if you have a the United States. Ann's stays are always of • Volunteers perform substantially all the significant connection to the United States, the short duration and she asks her brother's per- work. term “spouse” does not include a spouse from mission to stay with him. Her brother's house is whom you are legally separated under a decree not her permanent home, nor does she have In figuring the days of presence in the Uni- of divorce or separate maintenance. any other accommodations in the United States ted States, you can exclude only the days on that would be considered her permanent home. which you actually competed in the charitable Permanent home. A permanent home gener- Ann satisfies the presence test because she sports event. You cannot exclude the days on ally includes an accommodation such as a has no significant connection to the United which you were in the United States to practice house, an apartment, or a furnished room that is States. for the event, to perform promotional or other either owned or rented by you or your spouse. activities related to the event, or to travel be- The dwelling unit must be available at all times, Example—significant U.S. connection tween events. continuously, not only for short stays. but presence test met. Eric and Wanda

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Brown live for part of the year in a condomin- considered to be predominantly used in local Your connections to the relevant territory will ium, which they own, in the CNMI. They also and international waters if, during the tax year, be compared to the total of your connections own a house in Maine where they live for 120 the total amount of time it is used in interna- with the United States and foreign countries. days every year to be near their grown children tional waters and in the waters within 3 miles of Your answers to the questions on Form 8898, and grandchildren. The Browns are retired and the relevant territory exceeds the total amount Part III, will help establish the jurisdiction to their only income is from pension payments, of time it is used in the territorial waters of the which you have a closer connection. dividends, interest, and social security benefits. United States, another territory, or any foreign In 2020, Eric and Wanda spent only 160 country. Example—closer connection to the Uni- days in the CNMI because of an 85-day vaca- ted States. Marcos Reyes, a U.S. citizen, tion to Europe and Asia and 120 days in the Example. In 2020, Sean Silverman, a U.S. moved to Puerto Rico in 2020 to start an invest- United States. Although the Browns were citizen, was employed by a fishery and spent ment consulting and venture capital business. present in the United States for more than 90 250 days at sea on a fishing vessel. When not His spouse and two teenage children remained days and had a significant connection to the at sea, Sean lived with his spouse at a house in California to allow the children to complete United States because of their permanent home they own in American Samoa. The fishing ves- high school. He traveled back to the United there, they satisfied the presence test with re- sel on which Sean works departs and arrives at States regularly to see his spouse and children, spect to the CNMI because they had no earned various ports in American Samoa, other territo- to engage in business activities, and to take va- income in the United States and were consid- ries, and foreign countries, but was in interna- cations. Marcos had an apartment available for ered physically present in the CNMI for at least tional or American Samoa's local waters for 225 his full-time use in Puerto Rico, but remained a 183 days (160 days plus 30 days deemed days. For purposes of determining bona fide joint owner of the residence in California where present during their 85-day vacation to Europe residency of American Samoa, Sean will not be his spouse and children lived. Marcos and his and Asia for a total of 190 days). considered to have a tax home outside that ter- family had automobiles and personal belong- ritory solely because of his employment on ings such as furniture, clothing, and jewelry lo- board the fishing vessel. cated at both residences. Although Marcos was Tax Home a member of the Puerto Rico Chamber of Com- Year of Move merce, he also belonged to and had current re- You will have met the tax home test if you did lationships with social, political, cultural, and re- not have a tax home outside the relevant pos- If you are moving to or from a territory during ligious organizations in California. Marcos session during any part of the tax year. Your tax the year, you may still be able to meet the tax received mail in California, including bank and home is generally determined under the princi- home test for that year. See Special Rules in brokerage statements and credit card bills. He ples of section 911(d)(3) and section 162(a)(2) the Year of a Move, later, in this chapter. conducted his personal banking activities in (relating to traveling expenses while away from California. He held a California driver's license home). and was also registered to vote there. Based on Closer Connection all of the particular facts and circumstances per- Your tax home is your regular or main place taining to Marcos, he was not a bona fide resi- dent of Puerto Rico in 2020 because he had a of business, employment, or post of duty re- You will have met the closer connection test if, closer connection to the United States than to gardless of where you maintain your family during any part of the tax year, you do not have Puerto Rico. home. If you do not have a regular or main a closer connection to the United States or a place of business because of the nature of your foreign country than to the relevant U.S. terri- Closer connection to another territory. work, then your tax home is the place where tory. you regularly live. If you do not fit either of these Generally, territories are not treated as foreign categories, you are considered an itinerant and You will be considered to have a closer con- countries. Therefore, a closer connection to a your tax home is wherever you work. nection to a territory than to the United States or territory other than the relevant territory will not to a foreign country if you have maintained be treated as a closer connection to a foreign more significant contacts with the territories country. Exceptions than with the United States or foreign country. In determining if you have maintained more sig- Example—tax home and closer connec- There are some special rules regarding tax nificant contacts with the relevant territory, the tion to territory. Pearl Blackmon, a U.S. citi- home that provide exceptions to the general facts and circumstances to be considered in- zen, is a permanent employee of a hotel in rule stated above. clude, but are not limited to, the following. Guam, but works only during the tourist season. • The location of your permanent home. For the remainder of each year, Pearl lives with Students and Government • The location of your family. her spouse and children in the CNMI, where Officials • The location of personal belongings, such she has no outside employment. Most of Pearl's as automobiles, furniture, clothing, and personal belongings, including her automobile, Disregard the following days when determining jewelry owned by you and your family. are located in the CNMI. She is registered to whether you have a tax home outside the rele- • The location of social, political, cultural, vote in, and has a driver's license issued by, the vant territory. professional, or religious organizations CNMI. She does her personal banking in the • Days you were temporarily in the United with which you have a current relationship. CNMI and routinely lists her CNMI address as States as a student (see Student under • The location where you conduct your rou- her permanent address on forms and docu- Days of Presence in the United States or tine personal banking activities. ments. Pearl satisfies the presence test with re- Relevant Territory, earlier). • The location where you conduct business spect to both Guam and the CNMI. She satis- • Days you were in the United States serving activities (other than those that go into de- fies the tax home test with respect to Guam, as an elected representative of the rele- termining your tax home). because her regular place of business is in vant territory, or serving full time as an • The location of the jurisdiction in which you Guam. Pearl satisfies the closer connection test elected or appointed official or employee hold a driver's license. with respect to both Guam and the CNMI be- of the government of that territory (or any • The location of the jurisdiction in which you cause she does not have a closer connection to of its political subdivisions). vote. the United States or to any foreign country. • The location of charitable organizations to Pearl is considered a bona fide resident of Guam, the location of her tax home. Seafarers which you contribute. • The country of residence you designate on You will not be considered to have a tax home forms and documents. Exception for Year of Move outside the relevant territory solely because you • The types of official forms and documents are employed on a ship or other seafaring ves- you file, such as Form W-8BEN or Form If you are moving to or from a territory during sel that is predominantly used in local and inter- W-9. the year, you may still be able to meet the national waters. For this purpose, a vessel is

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closer connection test for that year. See Special 2017 through December 2019, Jean was a 2. You meet one of the following. Rules in the Year of a Move next. bona fide resident of American Samoa. Jean a. You take a position for U.S. tax purpo- continued to live there until September 6, 2020, ses that you became a bona fide resi- when she accepted new employment and dent of a U.S. territory after a tax year moved to Hawaii. Jean's principal place of busi- Special Rules in the Year for which you filed a U.S. income tax ness from January 1 through September 5, return as a citizen or resident alien of of a Move 2020 (more than 183 days), was in American the United States but not as a bona Samoa, and during that period Jean did not fide resident of the territory. If you are moving to or from a territory during have a closer connection to the United States or the year, you may still be able to meet the tax a foreign country than to American Samoa. If b. You are a citizen or resident alien of home and closer connection tests for that year. Jean continues to live and work in Hawaii for the United States who takes the posi- the rest of 2020 and throughout years 2021 tion for U.S. tax purposes that you Year of Moving to a Territory through 2023, she will satisfy the tax home and ceased to be a bona fide resident of a closer connection tests for 2020 with respect to U.S. territory after a tax year for which American Samoa. If Jean also satisfies the you filed an income tax return (with You will satisfy the tax home and closer con- presence test in 2020, she will be considered a the IRS, the territory tax authority, or nection tests in the tax year of changing your bona fide resident for the 2020 tax year. both) as a bona fide resident of the residence to the relevant territory if you meet all territory. of the following. • You have not been a bona fide resident of Puerto Rico c. You take the position for U.S. tax pur- the relevant territory in any of the 3 tax poses that you became a bona fide years immediately preceding your move. You will be considered a bona fide resident of resident of Puerto Rico or American • In the year of the move, you do not have a Puerto Rico for the part of the tax year preced- Samoa after a tax year for which you tax home outside the relevant territory or a ing the date on which you move if you: were required to file an income tax re- closer connection to the United States or a • Are a U.S. citizen, turn as a bona fide resident of the foreign country than to the relevant territory • Are a bona fide resident of Puerto Rico for CNMI, Guam, or the USVI. during any of the last 183 days of the tax at least 2 tax years immediately preceding year. the tax year of the move, Worldwide gross income. Worldwide gross • You are a bona fide resident of the relevant • Cease to be a bona fide resident of Puerto income means all income you received in the territory for each of the 3 tax years immedi- Rico during the tax year, form of money, goods, property, and services, ately following your move. • Cease to have a tax home in Puerto Rico including any income from sources outside the during the tax year, and United States (even if you can exclude part or Example. Dwight Wood, a U.S. citizen, files • Have a closer connection to Puerto Rico all of it) and before any deductions, credits, or returns on a calendar year basis. He lived in the than to the United States or a foreign coun- rebates. United States from January 2014 through May try throughout the part of the tax year pre- 2020. In June 2020, he moved to the USVI, pur- ceding the date on which you cease to Example. You are a U.S. citizen who chased a house, and accepted a permanent job have a tax home in Puerto Rico. moved to the CNMI in December 2019, but did with a local employer. From July 1 through De- not become a bona fide resident of that territory cember 31, 2020 (more than 183 days), Example. Randy White, a U.S. citizen, files until the 2020 tax year. You must file Form 8898 Dwight's principal place of business was in the returns on a calendar year basis. For all of 2018 for the 2020 tax year if your worldwide gross in- USVI and, during that time, he did not have a and 2019, Randy was a bona fide resident of come for that year was more than $75,000. closer connection to the United States or a for- Puerto Rico. From January through April 2020, eign country than to the USVI. Randy continued to reside and maintain his Penalty for Not Filing If he is a bona fide resident of the USVI dur- principal place of business in and closer con- ing all of 2021 through 2022, he will satisfy the nection to Puerto Rico. On May 5, 2020, Randy Form 8898 tax home and closer connection tests for 2020. moved and changed his tax home to Nevada. If Dwight also satisfies the presence test in Later that year, he established a closer connec- If you are required to file Form 8898 for any tax 2020, he will be considered a bona fide resident tion to the United States than to Puerto Rico. year and you fail to file it, you may owe a pen- of the USVI for the 2020 tax year. Randy did not satisfy the presence test for 2020 alty of $1,000. Also, you may owe this penalty if with respect to Puerto Rico, nor the tax home or you do not include all the information required closer connection tests. However, because by the form or the form includes incorrect infor- Year of Moving From a Randy was a bona fide resident of Puerto Rico mation. In either case, you will not owe this pen- Territory for at least 2 tax years before he moved to Ne- alty if you can show that such failure is due to vada in 2020, he was a bona fide resident of reasonable cause and not willful neglect. This is In the year you cease to be a bona fide resident Puerto Rico from January 1 through May 4, in addition to any criminal penalty that may be of American Samoa, the CNMI, Guam, or the 2020. imposed. USVI, you will satisfy the tax home and closer connection tests with respect to the relevant ter- ritory if you meet all of the following. Reporting a Change in • You have been a bona fide resident of the relevant territory for each of the 3 tax years Bona Fide Residence immediately preceding your change of res- idence. If you became or ceased to be a bona fide resi- 2. • In the year of the move, you do not have a dent of a U.S. territory, you may need to file tax home outside the relevant territory or a Form 8898. This applies to the U.S. territories of closer connection to the United States or a American Samoa, the CNMI, Guam, Puerto foreign country than to the relevant territory Rico, and the USVI. Possession during any of the first 183 days of the tax year. Who Must File • You are not a bona fide resident of the rel- Source Income evant territory for any of the 3 tax years im- You must file Form 8898 for the tax year in mediately following your move. In order to determine where to file your return which you meet both of the following conditions. and which form(s) you need to complete, you Example. Jean Aspen, a U.S. citizen, files 1. Your worldwide gross income (defined be- may need to determine the source of each item returns on a calendar year basis. From January low) in that tax year is more than $75,000. of income you received during the tax year.

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This chapter discusses the rules for determining Table 2-1. General Rules for Determining U.S. Source of Income if the source of your income is from: • American Samoa, Item of Income Factor Determining Source • The Commonwealth of the Northern Ma- Salaries, wages, and other compensation Where labor or services performed riana Islands, for labor or personal services Note. See Compensation for Labor or Personal • The Commonwealth of Puerto Rico (Puerto Rico), Services, later. • Guam, or Pensions Contributions: Where services were performed • The U.S. Virgin Islands. that earned the pension Generally, the same rules that apply for deter- Investment earnings: Where pension trust is mining U.S. source income also apply for deter- located mining territory source income. However, there Interest Residence of payer are some important exceptions to these rules. Both the general rules and the exceptions are Dividends Where corporation created or organized discussed in this chapter. Rents Location of property

U.S. income rule. This rule states that income Royalties: is not territory source income if, under the rules Natural resources Location of property of Internal Revenue Code sections 861–865, it Patents, copyrights, etc. Where property is used is treated as income: Sale of business inventory—purchased Where sold • From sources within the United States, or • Effectively connected with the conduct of a Sale of business inventory—produced Where sold unless sold within the Unites States. trade or business within the United States. Allocation if purchased in U.S. territory and sold within the United States. Table 2-1 shows the general rules for deter- mining whether income is from sources within Sale of real property Location of property the United States. Sale of personal property Seller's tax home (but see Special Rules for Gains From Dispositions of Certain Property, later, for Types of Income exceptions) Sale of natural resources Allocation based on fair market value of product at This section looks at the most common types of export terminal. For more information, see income received by individuals, and the rules Regulations section 1.863-1(b). for determining the source of the income. Gen- erally, the same rules shown in Table 2-1 are Likewise, if your tax residence is in one of the in determining the source of the compensation. used to determine if you have territory source 50 states or the District of Columbia before relo- Compensation (other than certain fringe bene- income. cating and you choose to keep it as your tax fits) is sourced on a time basis. Certain fringe residence, the source of income for services benefits (such as housing and education) are performed in any of the U.S. territories is con- sourced on a geographical basis. Compensation for Labor or sidered to be the United States and, specifi- Or you may be permitted to use an alterna- Personal Services cally, your state of residence or the District of tive basis to determine the source of compen- Columbia. sation. See Alternative basis, later. Income from labor or personal services includes For more information, see the following. If you are self-employed, determine the wages, salaries, commissions, fees, per diem • Notice 2010-30, available at IRS.gov/irb/ source of your income for labor or personal allowances, employee allowances and bo- 2010-18_IRB#NOT-2010-30. services from self-employment on the basis that nuses, and fringe benefits. It also includes in- • Notice 2011-16, available at IRS.gov/irb/ most correctly reflects the proper source of that come earned by sole proprietors and general 2011-17_IRB#NOT-2011-16. income under the facts and circumstances of partners from providing personal services in the • Notice 2012-41, available at IRS.gov/irb/ your particular case. In many cases, the facts course of their trades or businesses. 2012-26_IRB#NOT-2012-41. and circumstances will call for an apportion- Also, you can consult with state, local, or ment on a time basis as explained next. Services performed wholly within a relevant U.S. territory tax authorities regarding your tax Time basis. Use a time basis to figure your territory. Generally, all pay you receive for obligations under MSRRA. compensation for labor or personal services services performed in a relevant territory is con- from the relevant territory (other than the fringe sidered to be from sources within that territory. De minimis exception. There is an exception benefits discussed later). Do this by multiplying However, there are exceptions to this rule as to the rule for determining the source of income your total compensation (other than the fringe discussed further below. earned in a territory. Generally, you will not benefits discussed later) by the following frac- have income from a territory if during a tax year U.S. Armed Forces. If you are a bona fide tion: you: resident of a relevant territory, your military • Are a U.S. citizen or resident; service pay on active duty will be sourced in • Are not a bona fide resident of that terri- Number of days you performed that territory even if you perform the services in tory; services in the relevant the United States or another territory. However, • Are not employed by or under contract with territory during the year if you are not a bona fide resident of a territory, an individual, partnership, or corporation your military service pay will be income from the Total number of days you that is engaged in a trade or business in United States even if you perform services in a that territory; performed services during the year territory. • Temporarily perform services in that terri- Civilian spouse of active duty member tory for 90 days or less; and You can use a unit of time less than a day in of the U.S. Armed Forces. If you are a bona • Earned $3,000 or less from such services. the above fraction, if appropriate. The time pe- fide resident of a U.S. territory and choose to riod for which the income is made does not keep that territory as your tax residence under Services performed partly inside and partly have to be a year. Instead, you can use another MSRRA when relocating with your service outside a relevant territory. If you are an em- distinct, separate, and continuous time period if member spouse under military orders, the ployee and receive compensation for labor or you can establish to the satisfaction of the IRS source of income for your labor or personal personal services performed both inside and that this other period is more appropriate. services is considered to be that territory. outside the relevant territory, special rules apply

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Example. In 2020, you worked in your em- Disaster and coronavirus-related tax re- Personal property. The term “personal prop- ployer's office in the United States for 60 days lief. If you are required to file a U.S. federal in- erty” refers to property (such as machinery, and in the Puerto Rico office for 180 days, earn- come tax return, you may be entitled to some equipment, or furniture) that is not real property. ing a total of $80,000 for the year. Your Puerto special disaster and coronavirus-related rules Generally, gain (or loss) from the sale or other Rico source income is $60,000, figured as fol- regarding the use of retirement funds. For more disposition is sourced according to the seller's lows. information, see Form 8915-E and its instruc- tax home. If personal property is sold by a bona tions. fide resident of a relevant territory, the gain (or To determine whether you are required to loss) from the sale is treated as sourced within 180 days × $80,000 = $60,000 file a U.S. income tax return, see chapter 3. that territory. 240 days This rule does not apply to the sale of inven- Investment Income tory, intangible property, depreciable personal property, or property sold through a foreign of- Multi-year compensation. The source of fice or fixed place of business. The rules apply- This category includes such income as interest, multi-year compensation is generally deter- ing to sales of inventory are discussed below. dividends, rents, and royalties. mined on a time basis over the period to which For information on sales of the other types of the compensation is attributable. Multi-year property mentioned, see Internal Revenue Interest income. The source of interest in- compensation is compensation that is included Code section 865. in your income in 1 tax year but is attributable to come is generally determined by the residence of the payer. Interest paid by corporations cre- a period that includes 2 or more tax years. You Inventory. Your inventory is personal property ated or organized in a relevant territory (territory determine the period to which the income is at- that is stock in trade or that is held primarily for corporation) or by individuals who are bona fide tributable based on the facts and circumstances sale to customers in the ordinary course of your residents of a relevant territory is considered in- of your case. For more information on trade or business. The source of income from come from sources within that territory. multi-year compensation, see Regulations sec- the sale of inventory depends on whether the tion 1.861-4(b). However, there is an exception to this rule if inventory was purchased or produced. you are a bona fide resident of a relevant terri- Certain fringe benefits sourced on a tory, receive interest from a corporation created Purchased. Income from the sale of inven- geographical basis. If you received any of the or organized in that territory, and are a share- tory that you purchased is sourced where you following fringe benefits as compensation for la- holder of that corporation, and you own, directly sell the property. Generally, this is where title to bor or services performed as an employee or indirectly, at least 10% of the total voting the property passes to the buyer. However, in- partly inside and partly outside a relevant pos- stock of the corporation. See Regulations sec- come from the sale of inventory purchased session, you must source that income on a geo- tion 1.937-2(i) for more information. within a U.S. territory and sold within the United graphical basis. States is sourced based on an allocation. For • Housing. Dividends. Generally, dividends paid by a cor- information on making the allocation, see Regu- • Education. poration created or organized in a relevant terri- lations section 1.863-3. • Local transportation. tory will be considered income from sources • Tax reimbursement. within that territory. There are additional rules Produced. Income from the sale of inven- • Hazardous or hardship duty pay. for bona fide residents of a relevant territory tory that you produced in a relevant territory and • Moving expense reimbursement. who receive dividend income from territory cor- sold outside that territory (or vice versa) is sourced based on an allocation. For information For information on determining the source of porations, and who own, directly or indirectly, at on making the allocation, see Regulations sec- the fringe benefits listed above, see Regula- least 10% of the voting stock of the corporation. tion 1.863-3. tions section 1.861-4(b). For more information, see Regulations section 1.937-2(g). Alternative basis. You can determine the Special Rules for Gains From source of your compensation under an alterna- Rental income. Rents from property located in Dispositions of Certain Property tive basis if you establish to the satisfaction of a relevant territory are treated as income from the IRS that, under the facts and circumstances sources within that territory. There are special rules for gains from disposi- of your case, the alternative basis more prop- tions of certain investment property (for exam- erly determines the source of your income than Royalties. Royalties from natural resources lo- ple, stocks, bonds, debt instruments, diamonds, the time or geographical basis. If you use an al- cated in a relevant territory are considered in- and gold) owned by a U.S. citizen or resident ternative basis, you must keep (and have avail- come from sources within that territory. alien prior to becoming a bona fide resident of a able for inspection) records to document why Also considered territory source income are territory. You are subject to these special rules if the alternative basis more properly determines royalties received for the use of, or for the privi- you meet both of the following conditions. the source of your income. lege of using, in a relevant territory, patents, • For the tax year for which the source of the copyrights, secret processes and formulas, gain must be determined, you are a bona Pensions. Generally, pension income has two goodwill, trademarks, trade brands, franchises, fide resident of the relevant territory. components: contributions to the pension plan and other like property. • For any of the 10 years preceding that and the earnings accrued from investing those year, you were a citizen or resident alien of contributions. The contribution portion is Sales or Other Dispositions the United States (other than a bona fide sourced according to where services were per- resident of the relevant territory). formed that earned the pension. The invest- of Property ment earnings portion is sourced according to If you meet these conditions, gains from the the location of the pension trust making the dis- The source rules for sales or other dispositions disposition of this property will not be treated as tributions. of property are varied. The most common situa- income from sources within the relevant terri- tions are discussed below. tory for purposes of the Internal Revenue Code. Example. You are a U.S. citizen who Accordingly, bona fide residents of American worked in Puerto Rico for a U.S. company. All Real property. Real property includes land Samoa and Puerto Rico, for example, may not services were performed in Puerto Rico. Upon and buildings, and generally anything built on, exclude the gain on their U.S. tax return. (See retirement, you remained in Puerto Rico and growing on, or attached to land. The location of chapter 3 for additional filing information.) With began receiving your pension from the U.S. the property generally determines the source of respect to the CNMI, Guam, and the USVI, the pension trust of your employer. Distributions income from the sale. For example, if you are a gain from the disposition of this property will not from the U.S. pension trust must be allocated bona fide resident of Guam and sell your home meet the requirements for certain tax rules that between (1) contributions, which are Puerto that is located in Guam, the gain on the sale is Rico source income; and (2) investment earn- sourced in Guam. If, however, the home you ings, which are U.S. source income. sold was located in the United States, the gain is U.S. source income.

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may allow bona fide residents of those territo- fair market value of the security at the close of as an individual who is a bona fide resident or a ries to reduce or obtain a rebate of taxes on in- the market on the first and last days of this hold- corporation created or organized in that terri- come from sources within the relevant territo- ing period. This is your gain (or loss) that is trea- tory. ries. ted as being from sources within the relevant These rules do not apply to amounts territory. If you were a bona fide resident of the paid as salary or other compensation For details, see Regulations section relevant territory for more than one continuous for services. See Compensation for La- 1.937-2(f)(1) and Examples 1 and 2 of section period, combine the gains (or losses) from each bor or Personal Services, earlier in this chapter, 1.937-2(k). territory holding period. for the source rules that apply. Example 1. In 2014, Cheryl Jones, a U.S. Example 2. Assume the same facts as in citizen, lived in the United States and paid Example 1, except that Cheryl makes the spe- $1,000 for 100 shares of stock in the Rose Cor- cial election to allocate the gain between her Effectively Connected poration, a U.S. corporation listed on the New U.S. and territory holding periods. Cheryl's terri- York Stock Exchange. On March 1, 2017, she tory holding period began March 1, 2017, the Income moved to Puerto Rico and changed her tax date her tax home changed to Puerto Rico. home to Puerto Rico on the same date. Cheryl Therefore, the portion of the gain attributable to In limited circumstances, some kinds of income satisfied the presence test in 2017 and, under her territory holding period is $5,000 ($7,000 from sources outside the relevant territory must the year-of-move exception, she was consid- sale price – $2,000 closing value on the first day be treated as effectively connected with a trade ered a bona fide resident of Puerto Rico for the of the territory holding period). By reporting or business in that territory. These circumstan- rest of 2017. On March 1, 2017, the closing $5,000 of her $6,000 gain as Puerto Rico ces are listed below. value of Cheryl's stock in the Rose Corporation source income on her 2020 Puerto Rico tax re- • You have an office or other fixed place of was $2,000. On January 5, 2020, while still a turn (and the remainder as non-Puerto Rico business in the relevant territory to which bona fide resident of Puerto Rico, Cheryl sold source income), Cheryl elects to treat that the income can be attributed. all her Rose Corporation stock for $7,000. Un- amount as Puerto Rico source income. • That office or place of business is a mate- der the special rules discussed earlier, none of rial factor in producing the income. Cheryl's $6,000 gain will be treated as income Other personal property. For personal • The income is produced in the ordinary from sources within Puerto Rico. property other than marketable securities, use a course of the trade or business carried on time-based allocation. Figure the gain (or loss) through that office or other fixed place of The source rules discussed in the pre- attributable to the territory holding period by business. ! ceding paragraphs supplement, and multiplying your total gain (or loss) by the fol- CAUTION may apply in conjunction with, an exist- lowing fraction. An office or other fixed place of business is ing special rule. This existing special rule ap- a material factor if it significantly contributes to, plies if you are a U.S. citizen or resident alien and is an essential economic element in, the who becomes a bona fide resident of American Number of days in the earning of the income. Samoa, the CNMI, or Guam, and who has gain territory holding period The three kinds of income from sources out- from the disposition of certain U.S. assets dur- Total number of days side the relevant territory to which these rules ing the 10-year period beginning when you be- in your holding period apply are the following. came a bona fide resident. The gain is U.S. source income that is generally subject to U.S. 1. Rents and royalties for the use of, or for tax if the property is either (1) located in the Uni- The result is your gain (or loss) that is trea- the privilege of using, intangible personal ted States; (2) stock issued by a U.S. corpora- ted as being from sources within the relevant property located outside the relevant terri- tion or a debt obligation of a U.S. person or of territory. tory or from any interest in such property. the United States, a state (or political subdivi- Included are rents or royalties for the use sion), or the District of Columbia; or (3) property Example 3. In addition to the stock in Rose of, or for the privilege of using, outside the that has a basis in whole or in part by reference Corporation, Cheryl acquired a 5% interest in relevant territory, patents, copyrights, se- to property described in (1) or (2). See chap- the Alder Partnership on January 1, 2016. On cret processes and formulas, goodwill, ter 3 for filing information. March 1, 2017, when she established bona fide trademarks, trade brands, franchises, and residency in Puerto Rico, her partnership inter- similar properties if the rents or royalties est was not considered a marketable security. Special election. You can choose to treat the are from the active conduct of a trade or On September 15, 2020, while still a bona fide business in the relevant territory. part of gain (or loss) attributable to the time you resident of Puerto Rico, Cheryl sold her interest held the property while a bona fide resident of in Alder Partnership for a $100,000 gain. She 2. Dividends or interest from the active con- the relevant territory (the territory holding pe- had owned the interest for a total of 1,719 days. duct of a banking, financing, or similar riod) as gain (or loss) from sources within that Cheryl's territory holding period (from March 1, business in the relevant territory. territory. Make the election by reporting the gain 2017, through September 15, 2020) is 1,294 attributable to the territory holding period on 3. Income, gain, or loss from the sale or ex- days. The portion of her gain attributable to Pu- change outside the relevant territory, your income tax return for the year of disposi- erto Rico is $75,276 ($100,000 x (1,294 Puerto tion. This election overrides both of the special through the office or other fixed place of Rico days ÷ 1,719 total days)). By reporting business in the relevant territory, of: rules discussed earlier. $75,276 of her $100,000 gain as Puerto Rico There are two methods for figuring the gain source income on her 2020 Puerto Rico tax re- a. Stock in trade, (or loss) for the territory holding period, one for turn (and the remainder as non-Puerto Rico b. Property that would be included in in- marketable securities and another for other source income), Cheryl elects to treat $75,276 ventory if on hand at the end of the tax types of investment property. as Puerto Rico source income. year, or Marketable securities. Marketable securi- c. Property held primarily for sale to cus- ties are those actively traded on an established tomers in the ordinary course of busi- financial market, such as stock in a publicly held ness. corporation. Under the special election, allocate Scholarships, Fellowships, the gain (or loss) by figuring the appreciation Item (3) above will not apply if you sold the separately for your territory and U.S. holding Grants, Prizes, and Awards property for use, consumption, or disposition periods. outside the relevant territory and an office or Your territory holding period begins on the The source of these types of income is gener- other fixed place of business in a foreign coun- first day you do not have a tax home outside the ally the residence of the payer, regardless of try was a material factor in the sale. relevant territory. The gain (or loss) attributable who actually disburses the funds. Therefore, in to the territory holding period is the difference in order to be territory source income, the payer Example. Marcy Jackson is a bona fide must be a resident of the relevant territory, such resident of American Samoa. Her business,

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which she conducts from an office in American Where To Get Forms and To exclude American Samoa source in- Samoa, is developing and selling specialized come, attach a completed Form 4563 to your computer software. A software purchaser will Information U.S. tax return (see Form 4563, later, for more frequently pay Marcy an additional amount to Requests for advice about matters information). If you are excluding American Sa- install the software on the purchaser's operating connected with American Samoan tax- moa source income on your U.S. tax return, you system and to ensure that the software is func- ation should be sent to: will not be allowed any deductions from gross tioning properly. Marcy installs the software at income or credits against tax that are directly or the purchaser's place of business, which may American Samoa Government Tax Office indirectly allocable to the excluded income. For be in American Samoa, in the United States, or Executive Office Building more information, see Special Rules for Com- in another country. The income from selling the Pago Pago, AS 96799 pleting Your U.S. Tax Return in chapter 4. software is effectively connected with the con- If all of your income is from American Sa- duct of Marcy's business in American Samoa, moa sources, you are not required to file a U.S. even though the product's destination may be The phone number is 684-633-4181. tax return. However, if you have self-employ- outside the territory. However, the compensa- ment income, see Self-employment tax, later. tion she receives for installing the software (per- sonal services) outside of American Samoa is Nonresident alien. If you are a bona fide resi- not effectively connected with the conduct of You can access the American Samoa dent of American Samoa during the tax year, her business in the territory—the income is Government Tax Office at but a nonresident alien of the United States, sourced where she performs the services. www.americansamoa.gov/tax-office- you must generally file the following returns. page. • An American Samoa tax return reporting worldwide income. The fax number is 684-633-1513. • A U.S. tax return (Form 1040 or 1040-SR) reporting income from worldwide sources, but excluding American Samoa source in- The addresses and phone numbers lis- come other than amounts for services per- 3. ! ted above are subject to change. formed as an employee of the United CAUTION States or any of its agencies. For more in- formation, see Wages of U.S. government employees under Special Rules for Ameri- Filing Which Returns To File can Samoa, later. To exclude income from sources within American Samoa, attach a Your residency status and your source of in- completed Form 4563 to your U.S. tax re- Information for come with regard to American Samoa deter- turn (see Form 4563, later, for more infor- mine whether you file your return and pay your mation). Individuals in tax to American Samoa, to the United States, or For all other tax purposes, however, to both. you will be treated as a nonresident alien individual. For example, you are not al- In addition to the information below that is lowed the standard deduction, you cannot Certain U.S. categorized by residency status, the Special file a joint return, and you are not allowed a Rules for American Samoa section, later, con- deduction for a dependent unless that per- tains important information for determining the Possessions son is a citizen or national of the United correct forms to file. States. There are also limitations on what If you have income from American Samoa, the deductions and credits are allowed. See CNMI, Guam, Puerto Rico, or the USVI, you Bona Fide Resident of Pub. 519 for more information. may have to file a tax return with the tax depart- American Samoa ment of that territory. Or you may have to file Form 4563. If you must file a U.S. income tax two annual tax returns, one with the territory’s Bona fide residents of American Samoa are return and you qualify to exclude any of your in- tax department and the other with the IRS. This generally exempt from U.S. tax on their Ameri- come from American Samoa, claim the exclu- chapter covers the general rules for filing re- can Samoa source income. sion by completing Form 4563 and attaching it turns in the five territories. to your Form 1040 or 1040-SR. Form 4563 can- U.S. citizen or resident alien. If you are a not be filed by itself. There is an example of a You must first determine if you are a bona fide U.S. citizen (or national) or resident alien and a filled-in Form 4563 in chapter 5. resident of the relevant territory. See chapter 1 bona fide resident of American Samoa during for a discussion of the requirements you must the tax year, you must generally file the follow- Where to file. If you are a bona fide resident of meet. ing returns. American Samoa during the tax year and you You should ask for forms and advice about the • An American Samoa tax return reporting are not including a check or a money order, filing of territory tax returns from that territory’s your gross income from worldwide sour- send your U.S. tax return and all attachments tax department, not the IRS. Contact informa- ces. If you report non-American Samoa (including Form 4563) to: tion is listed in this chapter under the heading source income on your American Samoa for each territory. tax return, you can claim a credit against Department of the Treasury your American Samoa tax liability for in- Internal Revenue Service Disaster tax relief. If you are required to file come taxes paid on that income to the Uni- Austin, TX 73301-0215 an income tax return with the IRS, you may be ted States, a foreign country, or another USA entitled to disaster tax relief. For more informa- territory. tion about the tax relief that may be available, • A U.S. tax return reporting income from If you are including a check or a money or- see chapter 4. worldwide sources, but excluding income der, send your U.S. tax return and all attach- from sources within American Samoa. ments (including Form 4563) to: However, amounts received for services American Samoa performed as an employee of the United Internal Revenue Service States or any of its agencies cannot be ex- P.O. Box 1303 cluded (see Wages of U.S. government American Samoa has its own separate and in- Charlotte, NC 28201-1303 employees under Special Rules for Ameri- USA dependent tax system. Although its tax laws are can Samoa, later). modeled on the U.S. Internal Revenue Code, there are certain differences.

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Send your American Samoa tax return and year, you must generally file the following re- formed in American Samoa, are considered all attachments to the address given under turns. U.S. source income and must be reported on Where To Get Forms and Information, earlier. • An American Samoa tax return reporting both your U.S. and American Samoa income only your income from sources within tax returns. Self-employment tax. If you are not required American Samoa. Wages for services per- If you are a bona fide resident of American to file a U.S. tax return but have income that is formed in American Samoa, whether for a Samoa, you may have to file an income tax re- effectively connected with a trade or business in private employer, the U.S. government, or turn with both the United States and American American Samoa, you must file Form 1040-SS otherwise, are income from sources within Samoa. with the United States. On this form, you will re- American Samoa. • On your U.S. income tax return, you must port your self-employment income to the United • A U.S. tax return reporting your income report all non-American Samoa source in- States, and, if necessary, pay self-employment from worldwide sources. You can take a come, including your pay from the U.S. tax on that income. For more information, see credit against your U.S. tax liability if you government for services performed in Self-Employment Tax in chapter 4. paid income taxes to American Samoa (or American Samoa. You can claim a with- other territory or foreign country) and re- holding credit on your U.S. return for fed- Additional Medicare Tax. You may be re- ported income from those sources on your eral income taxes withheld from your fed- quired to pay Additional Medicare Tax. Also, U.S. tax return. eral wages. you may need to report Additional Medicare • On your American Samoa income tax re- De minimis exception to determining Tax withheld by your employer. For more infor- turn, you must report all income from all source of income. In certain situations, you mation, see Additional Medicare Tax under sources, including your wages from the will not have income from a territory. See De Special Rules for Completing Your U.S. Tax U.S. government for services performed in minimis exception under Compensation for La- Return in chapter 4. American Samoa. On this return, you may bor or Personal Services in chapter 2. claim an American Samoa tax credit for net Net Investment Income Tax. The Net Invest- income tax paid to the United States on the Nonresident alien. If you are a nonresident ment Income Tax (NIIT) is 3.8% of the lesser of same income. an individual’s net investment income or the ex- alien of the United States who does not qualify cess of the individual’s modified adjusted gross as a bona fide resident of American Samoa for If you are not a bona fide resident of Ameri- income over a specified threshold amount. The the tax year, you must generally file the follow- can Samoa, you must file an income tax return NIIT will apply to a bona fide resident of Ameri- ing returns. with the United States and you may also have can Samoa if a taxpayer has modified adjusted • An American Samoa tax return reporting to file one with American Samoa. On your U.S. gross income from sources outside of American only your income from sources within income tax return, you must report your pay Samoa that exceeds a specified threshold American Samoa. In this situation, wages from the U.S. government. On your American amount, for example, $200,000 for single filers. for services performed in American Sa- Samoa income tax return, you must report in- The NIIT does not apply to any individual who is moa, whether for a private employer, the come from American Samoa sources. a nonresident alien with respect to the United U.S. government, or otherwise, is income For further information about your American States. See Form 8960 and its instructions for from sources within American Samoa. Samoa income tax obligations, contact the more information on the NIIT. • A U.S. tax return (Form 1040-NR) report- American Samoa Government Tax Office at the ing U.S. source income according to the address and phone number indicated in chap- Estimated tax payments. To see if you are rules for a nonresident alien. See the In- ter 3. required to make payments of estimated in- structions for Form 1040-NR. come tax, self-employment tax, Additional Med- Active duty member of the U.S. Armed icare Tax, and/or NIIT to the IRS, get Form Where to file. If you are not a bona fide resi- Forces. If you are an active duty member of 1040-ES. dent of American Samoa during the tax year, the U.S. Armed Forces, you are not required to To pay by check or money order, send your and you are not including a check or a money file an income tax return with both the United payment with the Form 1040-ES payment order, send your U.S. tax return and all attach- States and American Samoa. Instead, you will voucher to: ments to: only be required to file an income tax return with one of those jurisdictions, depending upon Internal Revenue Service Department of the Treasury whether or not you are a bona fide resident of P.O. Box 1300 Internal Revenue Service American Samoa. Charlotte, NC 28201-1300 Austin, TX 73301-0215 • If you are a bona fide resident of American USA USA Samoa (your state of legal residence is in American Samoa) but you are stationed outside American Samoa in compliance To get information on paying electronically If you are including a check or a money or- with military orders, you are only required (by credit or debit card, or through the Elec- der, send your U.S. tax return and all attach- to file an income tax return with American tronic Federal Tax Payment System (EFTPS)), ments to: Samoa. On this return, you must report all go to IRS.gov/Payments. Internal Revenue Service income from all sources, including your For information on making estimated in- P.O. Box 1303 pay from the U.S. Armed Forces for serv- come tax payments to American Samoa, see Charlotte, NC 28201-1303 ices performed anywhere in the world. Where To Get Forms and Information, earlier. USA • If you are not a bona fide resident of Ameri- can Samoa (your state of legal residence Not a Bona Fide Resident of Send your American Samoa tax return and is other than American Samoa) but you are American Samoa all attachments to the address given under stationed in American Samoa in compli- Where To Get Forms and Information, earlier. ance with military orders, you are not re- An individual who is not a bona fide resident of quired to file an income tax return with American Samoa for the tax year but has in- American Samoa. Instead, you must file an come sourced in American Samoa, generally Special Rules for American income tax return with the United States files both U.S. and American Samoa tax re- Samoa (or other U.S. territory if you are a bona turns, and claims a foreign tax credit on the U.S. fide resident of the other territory) to report return for taxes paid to American Samoa. Some special rules apply to certain types of in- all income from all sources, including your come and employment connected with Ameri- pay from the U.S. Armed Forces for serv- U.S. citizen or resident alien. If you are a can Samoa. ices performed in American Samoa. U.S. citizen or resident alien but not a bona fide resident of American Samoa during the tax Wages of U.S. government employees. U.S. National Guard and military reservists. government wages, including for services per- Members of the National Guard or a reserve

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component of the U.S. Armed Forces will gen- Double Taxation Rules for Puerto Rico, later, for an excep- erally follow the income tax rules for U.S. gov- tion. ernment employees, not for active duty mem- A mutual agreement procedure exists to settle If you are excluding Puerto Rico income on bers of the U.S. Armed Forces. cases of double taxation between the United your U.S. tax return, you will not be allowed any deductions or credits that are directly or indi- Civilian spouse of active duty member of States and American Samoa. See Double Tax- rectly allocable to exempt income. For more in- the U.S. Armed Forces. If you are a civilian ation in chapter 4. formation, see Special Rules for Completing spouse of an active duty member of the U.S. Your U.S. Tax Return in chapter 4. Armed Forces, see Special rule for civilian spouse of active duty member of the U.S. The Commonwealth If all of your income is from Puerto Rico Armed Forces in chapter 1 for more information. sources, you are not required to file a U.S. tax of Puerto Rico return. However, if you have self-employment The spouse of the service member may income, see Self-employment tax, later. elect to use the same residence for tax purpo- The Commonwealth of Puerto Rico has its own ses as the service member regardless of the separate and independent tax system. Although U.S. citizen only. If you are a U.S. citizen, you date on which the marriage of the spouse and it is modeled after the U.S. system, there are may also qualify under these rules if you have service member occurred. differences in law and tax rates. been a bona fide resident of Puerto Rico for at least 2 years before moving from Puerto Rico. Federal retiree pension income. Federal re- In this case, you can exclude your income de- tirees who are bona fide residents of American Where To Get Forms and rived from sources within Puerto Rico (but not Samoa must file an income tax return with Information wages and salaries received as an employee of American Samoa to report all income from all the U.S. government or its agencies) that you sources, including federal pension income. The Requests for information about the fil- earned before the date you changed your resi- retiree may also have an income tax filing re- ing of Puerto Rico tax returns should dence. For more information, see Puerto Rico quirement with the United States, depending be addressed to: under Year of Moving From a Territory in chap- upon the source of the retiree’s pension in- ter 1. come. Pension income can have multiple sour- Departamento de Hacienda ces. See Negociado de Asistencia Contributiva Pensions and other source of income Nonresident alien. If you are a bona fide resi- rules in chapter 2 for more information. If any P.O. Box 9024140 San Juan, Puerto Rico 00902-4140 dent of Puerto Rico during the tax year, but a part of the pension income is sourced in the nonresident alien of the United States, you must United States, the retiree must also file an in- generally file the following returns. come tax return with the United States. • A Puerto Rico tax return reporting income The phone numbers are 787-622-0123 from worldwide sources. If you report U.S. Disaster and coronavirus-related tax re- and 787-620-2323. lief. If you are required to file a U.S. federal in- source income on your Puerto Rico tax re- come tax return, you may be entitled to some turn, you can claim a credit against your special disaster and coronavirus-related rules You can access the Hacienda website Puerto Rico tax, up to the amount allowa- regarding the use of retirement funds. For more at www.hacienda.gobierno.pr. ble, for income taxes paid to the United information, see Form 8915-E and its instruc- States. tions. • A U.S. tax return (Form 1040-NR) report- The addresses and phone numbers lis- ing income from worldwide sources, but Moving expense deduction. The deduction ! ted above are subject to change. excluding Puerto Rico source income CAUTION for moving expenses is suspended unless you (other than amounts for services per- are a member of the U.S. Armed Forces who formed as an employee of the United moves pursuant to a military order and incident Which Returns To File States or any of its agencies). For tax pur- to a permanent change of station. For more in- poses other than reporting income, how- formation, see Pub. 3. If you meet these re- ever, you will be treated as a nonresident Generally, you will file returns with both Puerto quirements, see the discussion below. alien individual. For example, you are not Rico and the United States. The income repor- allowed the standard deduction, you can- Generally, expenses of a move to American ted on each return depends on your residency Samoa are directly attributable to American Sa- not file a joint return, and you are not al- status in Puerto Rico. To determine if you are a lowed a deduction for a dependent unless moan wages, salaries, and other earned in- bona fide resident of Puerto Rico and have in- come. Likewise, the expenses of a move back that person is a citizen or national of the come sourced within and outside Puerto Rico, United States. There are also limitations on to the United States are generally attributable to see the information in chapter 1. U.S. earned income. what deductions and credits are allowed. If your move was to American Samoa, report See Pub. 519 for more information. your deduction for moving expenses as follows. Bona Fide Resident of Puerto Rico If you are a bona fide resident in the tax Self-employment tax. If you have no U.S. fil- • Bona fide residents of Puerto Rico will generally year of your move, enter your deductible ing requirement but have income that is effec- pay tax to Puerto Rico on their worldwide in- expenses on your American Samoa tax re- tively connected with a trade or business in Pu- come. turn. erto Rico, you must file Form 1040-SS or Form If you are not a bona fide resident, enter 1040-PR with the United States to report your • U.S. citizen or resident alien. If you are a your deductible expenses on both your self-employment income and, if necessary, pay U.S. citizen or resident alien and also a bona American Samoa and U.S. tax returns. self-employment tax. For more information, see fide resident of Puerto Rico during the tax year, Also, for purposes of a tax credit against Self-Employment Tax in chapter 4. you must generally file the following returns. your U.S. tax liability, reduce your Ameri- • A Puerto Rico tax return reporting income Additional Medicare Tax. You may be re- can Samoa general category income on from worldwide sources. If you report U.S. quired to pay Additional Medicare Tax. Also, Form 1116, line 1a, by entering the deduc- source income on your Puerto Rico tax re- you may need to report Additional Medicare tible moving expenses on line 2. turn, you can claim a credit against your Tax withheld by your employer. For more infor- If your move was to the United States, com- Puerto Rico tax, up to the amount allowa- mation, see Additional Medicare Tax under plete Form 3903, and enter the deductible ble, for income taxes paid to the United Special Rules for Completing Your U.S. Tax amount on Schedule 1 (Form 1040), line 13. States. Return in chapter 4. • A U.S. tax return reporting income from worldwide sources, but excluding Puerto Net Investment Income Tax. The Net Invest- Rico source income. However, see U.S. ment Income Tax (NIIT) is 3.8% of the lesser of government employees under Special an individual’s net investment income or the

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excess of the individual’s modified adjusted • A U.S. tax return (Form 1040-NR) accord- U.S. Armed Forces. Bona fide residents of gross income over a specified threshold ing to the rules for a nonresident alien. See Puerto Rico include active duty military person- amount. The NIIT will apply to a bona fide resi- the Instructions for Form 1040-NR. nel whose official home of record is Puerto dent of Puerto Rico if a taxpayer has modified Rico. adjusted gross income from sources outside of De minimis exception to determining Puerto Rico that exceeds a specified threshold source of income. In certain situations, you Civilian spouse of active duty member of amount, for example, $200,000 for single filers. will not have income from a territory. See De the U.S. Armed Forces. If, under the rule dis- The NIIT does not apply to any individual who is minimis exception under Compensation for La- cussed at the beginning of chapter 1 (see Spe- a nonresident alien with respect to the United bor or Personal Services in chapter 2. cial rule for civilian spouse of active duty mem- States. See Form 8960 and its instructions for ber of the U.S. Armed Forces), your tax Where to file. Use the addresses listed below more information on the NIIT. residence is Puerto Rico, follow the guidance in to file your U.S. and Puerto Rico income tax re- the section for bona fide residents under Which Estimated tax payments. To see if you are turns. Returns To File, earlier. However, if your tax required to make payments of estimated in- If you are not including a check or a money residence is one of the 50 states or the District come tax, self-employment tax, Additional Med- order, send your U.S. tax return and all attach- of Columbia and your only income from Puerto icare Tax, and/or NIIT to the IRS, get Form ments to: Rico is from wages, salaries, tips, or self-em- 1040-ES (or Form 1040-ES(PR)). ployment, you will be taxed on your worldwide To pay by check or money order, send your Department of the Treasury income and file only a U.S. tax return (Form payment with the Form 1040-ES (or Form Internal Revenue Service 1040 or 1040-SR) and a state and/or local tax 1040-ES(PR)) payment voucher to: Austin, TX 73301-0215 return, if required. If you have income from Pu- USA erto Rico other than wages, salaries, tips, or Internal Revenue Service self-employment that is considered to be P.O. Box 1300 If you are including a check or a money or- sourced in that territory (see Table 2-1), contact Charlotte, NC 28201-1300 der, send your U.S. tax return and all attach- the Hacienda for guidance. USA ments to: The spouse of the service member may elect to use the same residence for tax purpo- To get information on paying electronically Internal Revenue Service ses as the service member regardless of the (by credit or debit card, or through the Elec- P.O. Box 1303 date on which the marriage of the spouse and tronic Federal Tax Payment System (EFTPS)), Charlotte, NC 28201-1303 service member occurred. go to IRS.gov/Payments. USA For information on making estimated in- Income from sources outside Puerto Rico come tax payments to Hacienda, see Where To If you request a refund on your Puerto Rico and the United States. If you are a U.S. citi- Get Forms and Information, earlier. return, send your Puerto Rico tax return and all zen and bona fide resident of Puerto Rico and attachments to: you have income from sources outside both Pu- erto Rico and the United States, that income is Not a Bona Fide Resident of Departamento de Hacienda treated as foreign source income under both tax Puerto Rico P.O. Box 50072 systems. In addition to your Puerto Rico and San Juan, PR 00902-6272 U.S. tax returns, you may also have to file a re- An individual who is not a bona fide resident of turn with the country or territory from which your Puerto Rico for the tax year may have to file tax outside income was derived. To avoid double returns with both Puerto Rico and the United Send all other Puerto Rico tax returns, with all attachments, to: taxation, a foreign tax credit is generally availa- States. ble for either the U.S. or Puerto Rico return. Departamento de Hacienda U.S. citizen or resident alien. If you are a Example. Thomas Red is a bona fide resi- U.S. citizen or resident alien but not a bona fide P.O. Box 9022501 San Juan, PR 00902-2501 dent of Puerto Rico and a U.S. citizen. He trav- resident of Puerto Rico during the tax year, you eled to the Dominican Republic and worked in must generally file the following returns. the construction industry for 1 month. His wa- • A Puerto Rico tax return reporting only Special Rules for Puerto ges were $20,000. Because the wages were your income from Puerto Rico sources. Rico earned outside Puerto Rico and outside the Wages for services performed in Puerto United States, Thomas must file a tax return Rico, whether for a private employer, the In addition to the general rules given earlier for with Puerto Rico and the United States. He may U.S. government, or otherwise, are income filing U.S. and Puerto Rico tax returns, there are also have to file a tax return with the Dominican from Puerto Rico sources. some special rules that apply to certain individ- Republic. • A U.S. tax return reporting income from uals and types of income. worldwide sources. Generally, you can Moving expense deduction. The deduction claim a foreign tax credit for income taxes U.S. government employees. Wages and for moving expenses is suspended unless you paid to Puerto Rico on the Puerto Rico in- cost-of-living allowances paid by the U.S. gov- are a member of the U.S. Armed Forces who come that is subject to Puerto Rico taxes ernment (or one of its agencies) for working in moves pursuant to a military order and incident and not exempt from U.S. taxes (see chap- Puerto Rico are subject to Puerto Rico tax. to a permanent change of station. For more in- ter 4 for more information). However, the cost-of-living allowances are ex- formation, see Pub. 3. If you meet these re- cluded from Puerto Rico gross income up to the quirements, see the discussion below. Nonresident alien. If you are a nonresident amount exempt from U.S. tax. In order to claim Generally, expenses of a move to Puerto alien of the United States who does not qualify this exclusion, you must: Rico are directly attributable to wages, salaries, as a bona fide resident of Puerto Rico for the • Include with your Puerto Rico tax return and other earned income from Puerto Rico. tax year, you must generally file the following evidence to show the amount received Likewise, the expenses of a move back to the returns. during the year, and United States are generally attributable to U.S. • A Puerto Rico tax return reporting only • Be in full compliance with your Puerto Rico earned income. your income from Puerto Rico sources. tax responsibilities. If your move was to Puerto Rico, report your Wages for services performed in Puerto deduction for moving expenses as follows. Rico, whether for a private employer, the These wages are also subject to U.S. tax, If you are a bona fide resident in the tax U.S. government, or otherwise, is income but the cost-of-living allowances are excluda- • year of your move, enter your deductible from Puerto Rico sources. ble. A foreign tax credit is available in order to avoid double taxation. expenses on your Puerto Rico tax return.

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• If you are not a bona fide resident, enter The addresses and phone numbers lis- tax to either the CNMI or the United States. your deductible expenses on both your Pu- ! ted above are subject to change. Pay any balance of tax due with your tax erto Rico and U.S. tax returns. Also, for CAUTION return. purpose of a tax credit against your U.S. tax liability, reduce your Puerto Rico gen- Note. You may also need to complete eral category income on Form 1116, Which Return To File Form 5074. line 1a, by entering the deductible moving • You are not liable for filing an income tax expenses on line 2. In general, all individuals with income from the return with, or for paying tax to, the CNMI CNMI will file only one return, either to the for the tax year. If your move was to the United States, com- CNMI or to the United States. Your residency plete Form 3903, and enter the deductible status with regard to the CNMI determines Form 5074. If you file a U.S. income tax return, amount on Schedule 1 (Form 1040), line 13. which return you will file. Be sure to check the attach a completed Form 5074 if you (and your Special Rules for the Commonwealth of the Additional child tax credit (ACTC). If you are spouse if filing a joint return) have: Northern Mariana Islands, later, for additional • Adjusted gross income of $50,000 or more not required to file a U.S. income tax return, this information about filing your tax return. credit is available only if you meet all three of for the tax year, and the following conditions. • Gross income of $5,000 or more from • You were a bona fide resident of Puerto Bona Fide Resident of the sources within the CNMI. Rico during the tax year. Commonwealth of the Northern The United States and the CNMI use this • Social security and Medicare taxes were Mariana Islands form to divide your income taxes. withheld from your wages or you paid There is an example of a filled-in Form 5074 self-employment tax. If you are a U.S. citizen, resident alien, or non- in chapter 5. • You had three or more qualifying children. resident alien and a bona fide resident of the (For the definition of a qualifying child, see CNMI during the tax year, file your income tax De minimis exception to determining the instructions for Form 1040-PR or Form return with the CNMI. source of income. In certain situations, you 1040-SS.) • Include income from worldwide sources on will not have income from a territory. See De your CNMI return. In determining your total If your income exceeds certain levels, you minimis exception under Compensation for La- tax payments, include all income tax with- bor or Personal Services in chapter 2. may be disqualified from receiving this credit. held and paid to either the CNMI or the Use Form 1040-PR or Form 1040-SS to claim United States, any credit for an overpay- the ACTC. Citizen or resident alien of the United ment of income tax to either the CNMI or States but not a bona fide resident of the the United States, and any payments of Commonwealth of the Northern Mariana Is- Double Taxation estimated tax to either the CNMI or the lands. If you are a citizen or resident alien of United States. Pay any balance of tax due the United States but not a bona fide resident of A mutual agreement procedure exists to settle with your tax return. the CNMI during the tax year and you are not in- cases of double taxation between the United • Generally, if you properly file your return cluding a check or a money order, send your re- States and the Commonwealth of Puerto Rico. with, and fully pay your income tax to, the turn and all attachments to: See Double Taxation in chapter 4. CNMI, then you are not liable for filing an income tax return with, or for paying tax to, Department of the Treasury the United States for the tax year. How- Internal Revenue Service The Commonwealth of ever, if you were self-employed in 2020, Austin, TX 73301-0215 see Self-employment tax, later. the Northern Mariana USA Example. David Gold was a bona fide resi- If you are including a check or a money or- Islands dent of the CNMI for 2020. He received wages der, send your U.S. tax return and all attach- of $30,000 paid by a private employer in the ments to: The CNMI has its own tax system based partly CNMI and dividends of $4,000 from U.S. corpo- on the same tax laws and tax rates that apply to rations that carry on business mainly in the Uni- Internal Revenue Service the United States and partly on local taxes im- ted States. He must file a 2020 income tax re- P.O. Box 1303 posed by the CNMI government. turn with the CNMI Division of Revenue and Charlotte, NC 28201-1303 Taxation. He reports his total income of USA Where To Get Forms and $34,000 on the CNMI return. Information Where to file. If you are a bona fide resident of Nonresident Alien (Other Than a Requests for advice about CNMI resi- the CNMI for the tax year, send your return and Bona Fide Resident of the dency and tax matters should be ad- all attachments to the Division of Revenue and Commonwealth of the Northern dressed to: Taxation at the address given earlier. Mariana Islands)

Commonwealth of the Northern Mariana U.S. Citizen or Resident Alien If you are a nonresident alien of the United Islands (Other Than a Bona Fide Resident States who does not qualify as a bona fide resi- Division of Revenue and Taxation of the Commonwealth of the dent of the CNMI for the tax year, you must P.O. Box 5234 CHRB Northern Mariana Islands) generally file the following returns. Dandan Commercial Center • A CNMI tax return reporting only your in- come from sources within the CNMI. In this Saipan, MP 96950 If you have income from sources within the situation, wages for services performed in CNMI and are a U.S. citizen or resident alien, the CNMI, whether for a private employer, but you are not a bona fide resident of the CNMI the U.S. government, or otherwise, are in- You can order forms and publications during the tax year, file your income tax return come from sources within the CNMI. by calling 670-664-1000. with the United States. • A U.S. tax return (Form 1040-NR) report- • Include income from worldwide sources on ing U.S. source income according to the your U.S. return. In determining your total You can order forms and publications rules for a nonresident alien. See the In- tax payments, include all income tax with- through fax at 670-664-1015. structions for Form 1040-NR. held and paid to either the United States or the CNMI, any credit for an overpayment of income tax to either the United States or the CNMI, and any payments of estimated

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If you are not a bona fide resident of the Example. Marsha Blue, a U.S. citizen, was If your move was to the United States, com- CNMI during the tax year and you are not in- a resident of the United States, and her spouse, plete Form 3903, and enter the deductible cluding a check or a money order, send your a citizen of both the CNMI and the United amount on Schedule 1 (Form 1040), line 13. U.S. tax return and all attachments to: States, was a bona fide resident of the CNMI, during the tax year. Marsha earned $65,000 as Self-employment tax. If you have no U.S. fil- Department of the Treasury a computer programmer in the United States. ing requirement, but have income that is effec- Internal Revenue Service Her spouse earned $20,000 as an artist in the tively connected with a trade or business in the Austin, TX 73301-0215 CNMI. Marsha and her spouse will file a joint re- CNMI, you must file Form 1040-SS with the Uni- USA turn. Because Marsha has the greater AGI, she ted States to report your self-employment in- and her spouse must file their return with the come and, if necessary, pay self-employment If you are including a check or a money or- United States and report the entire $85,000 on tax. der, send your U.S. tax return and all attach- that return. ments to: Additional Medicare Tax. You may be re- U.S. Armed Forces. If you are a member of quired to pay Additional Medicare Tax. Also, Internal Revenue Service the U.S. Armed Forces on active duty who you may need to report Additional Medicare P.O. Box 1303 qualified as a bona fide resident of the CNMI in Tax withheld by your employer. For more infor- Charlotte, NC 28201-1303 a prior tax year, your absence from the CNMI mation, see Additional Medicare Tax under USA solely in compliance with military orders will not Special Rules for Completing Your U.S. Tax change your bona fide residency. If you did not Return in chapter 4. qualify as a bona fide resident of the CNMI in a Send your CNMI tax return and all attach- prior tax year, your presence in the CNMI solely Estimated tax payments. To see if you are ments to: in compliance with military orders will not qualify required to make payments of estimated in- come tax, self-employment tax, and/or Addi- Department of Finance you as a bona fide resident of the CNMI. tional Medicare Tax to the IRS, get Form Division of Revenue and Taxation Civilian spouse of active duty member 1040-ES. Commonwealth of the Northern Mariana of the U.S. Armed Forces. If, under the rule Islands discussed at the beginning of chapter 1 (see Payment of estimated tax. If you must P.O. Box 5234 CHRB Special rule for civilian spouse of active duty pay estimated tax, make your payment to the Saipan, MP 96950 member of the U.S. Armed Forces), your tax jurisdiction where you would file your income residence is the CNMI, follow the guidance in tax return if your tax year were to end on the Citizen of the Commonwealth of the section for bona fide residents under Which date your first estimated tax payment is due. the Northern Mariana Islands Return To File, earlier. However, if your tax resi- Generally, you should make the rest of your dence is one of the 50 states or the District of quarterly payments of estimated tax to the juris- If you are a citizen of the CNMI (meaning that Columbia and your only income from the CNMI diction where you made your first payment of you were born or naturalized in the CNMI) but is from wages, salaries, tips, or self-employ- estimated tax. However, estimated tax pay- not otherwise a U.S. citizen or a U.S. resident ment, you will be taxed on your worldwide in- ments to either jurisdiction will be treated as alien during the tax year, file your income tax re- come and file only a U.S. tax return (Form 1040 payments to the jurisdiction with which you file turn with the CNMI. Include income from world- or 1040-SR) and a state and/or local tax return, the tax return. wide sources on your CNMI return. Take into if required. If you have income from the CNMI If you make a joint payment of estimated tax, account tax withheld by both jurisdictions in de- other than wages, salaries, tips, or self-employ- make your payment to the jurisdiction where the termining if there is tax overdue or an overpay- ment that is considered to be sourced in that spouse who has the greater estimated AGI ment. Pay any balance of tax due with your tax territory (see Table 2-1), you may need to file would have to pay (if a separate payment were return. Send your return and all attachments to: Form 5074 with your U.S. tax return. made). For this purpose, income is determined The spouse of the service member may without regard to community property laws. Department of Finance elect to use the same residence for tax purpo- Early payment. If you make your first pay- Division of Revenue and Taxation ses as the service member regardless of the ment of estimated tax early, follow the rules Commonwealth of the Northern Mariana date on which the marriage of the spouse and given earlier to determine where to send it. If Islands service member occurred. you send it to the wrong jurisdiction, make all P.O. Box 5234 CHRB later payments to the jurisdiction to which the Saipan, MP 96950 Moving expense deduction. The deduction for moving expenses is suspended unless you first payment should have been sent. are a member of the U.S. Armed Forces who To pay by check or money order, send your Special Rules for the moves pursuant to a military order and incident payment with the Form 1040-ES payment Commonwealth of the to a permanent change of station. For more in- voucher to: formation, see Pub. 3. If you meet these re- Northern Mariana Islands Internal Revenue Service quirements, see the discussion below. P.O. Box 1300 Special rules apply to certain types of income, Generally, expenses of a move to the CNMI Charlotte, NC 28201-1300 employment, and filing status. are directly attributable to wages, salaries, and USA other earned income from the CNMI. Likewise, Joint return. If you file a joint return, file your the expenses of a move back to the United return (and pay the tax) with the jurisdiction States are generally attributable to U.S. earned To get information on paying electronically where the spouse who has the greater adjusted income. (by credit or debit card, or through the Elec- gross income (AGI) would have to file if you If your move was to the CNMI, report your tronic Federal Tax Payment System (EFTPS)), were filing separately. If the spouse with the deduction for moving expenses as follows. go to IRS.gov/Payments. greater AGI is a bona fide resident of the CNMI • If you are a bona fide resident in the tax For information on making estimated in- during the tax year, file the joint return with the year of your move, enter your deductible come tax payments to the CNMI, see Where To CNMI. If the spouse with the greater AGI is a expenses on your CNMI tax return. Get Forms and Information, earlier. U.S. citizen or resident alien but not a bona fide • If you are not a bona fide resident, enter resident of the CNMI during the tax year, file your deductible expenses on Form 3903, your joint return with the United States. For this and enter the deductible amount on Double Taxation purpose, income is determined without regard Schedule 1 (Form 1040), line 13, and on to community property laws. Form 5074, line 20. A mutual agreement procedure exists to settle cases of double taxation between the United States and the Commonwealth of the Northern

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Mariana Islands. See Double Taxation in chap- and dividends of $2,000 from U.S. corporations Internal Revenue Service ter 4. that carry on business mainly in the United P.O. Box 1303 States. He must file a 2020 income tax return Charlotte, NC 28201-1303 with the government of Guam. He reports his USA Guam total income of $27,000 on the Guam return. Nonresident Alien (Other Than a Guam has its own tax system based on the If you are a bona fide resident of Guam for Bona Fide Resident of Guam), same tax laws and tax rates that apply in the the tax year, send your return and all attach- Where To File United States. ments to: If you are a nonresident alien of the United Department of Revenue and Taxation States who does not qualify as a bona fide resi- Where To Get Forms and Taxpayer Services Division dent of Guam for the tax year, you must gener- P.O. Box 23607 Information ally file the following returns. GMF, Guam 96921 Requests for advice about Guam resi- • A Guam tax return reporting only your in- dency and tax matters should be ad- come from sources within Guam. In this sit- dressed to: U.S. Citizen or Resident Alien uation, wages for services performed in (Other Than a Bona Fide Resident Guam, whether for a private employer, the Department of Revenue and Taxation of Guam) U.S. government, or otherwise, are income Taxpayer Services Division from sources within Guam. P.O. Box 23607 If you have income from sources within Guam • A U.S. tax return (Form 1040-NR) report- GMF, Guam 96921 and are a U.S. citizen or resident alien, but you ing U.S. source income according to the are not a bona fide resident of Guam during the rules for a nonresident alien. See the In- tax year, file your income tax return with the structions for Form 1040-NR. United States. You can order forms and publications Include income from worldwide sources on If you are not a bona fide resident of Guam by calling 671-635-1840 or • your U.S. return. In determining your total 671-635-1841. during the tax year and you are not including a tax payments, include all income tax with- check or money order, send your U.S. tax re- held and paid to either the United States or You can order forms and publications turn and all attachments to: Guam, any credit for an overpayment of in- through fax at 671-633-2643. come tax to either the United States or Department of the Treasury Guam, and any payments of estimated tax Internal Revenue Service You can get forms and publications at to either Guam or the United States. Pay Austin, TX 73301-0215 www.guamtax.com. any balance of tax due with your tax return. USA You may also need to complete Form 5074. If you are including a check or a money or- The addresses and phone numbers lis- • You are not liable for filing an income tax ted above are subject to change. der, send your U.S. tax return and all attach- ! return with, or for paying tax to, Guam for ments to: CAUTION the tax year. Internal Revenue Service Which Return To File Form 5074. If you file a U.S. income tax return, P.O. Box 1303 attach a completed Form 5074 if you (and your Charlotte, NC 28201-1303 Bona fide residents of Guam are subject to spe- spouse if filing a joint return) have: USA cial U.S. tax rules. In general, all individuals with • Adjusted gross income of $50,000 or more for the tax year, and income from Guam will file only one return—ei- Send your Guam tax return and all attach- • Gross income of $5,000 or more from ther to Guam or the United States. ments to: sources within Guam. Bona Fide Resident of Guam The United States and Guam use this form Department of Revenue and Taxation to divide your income taxes. Taxpayer Services Division If you are a bona fide resident of Guam during See the Illustrated Example of Form 5074 in P.O. Box 23607 the tax year, file your return with Guam. This ap- chapter 5. GMF, Guam 96921 plies to all bona fide residents who are citizens, resident aliens, or nonresident aliens of the Uni- De minimis exception to determining Citizen of Guam ted States. source of income. In certain situations, you • Include income from worldwide sources on will not have income from a territory. See De If you are a citizen of Guam (meaning that you your Guam return. In determining your total minimis exception under Compensation for La- were born or naturalized in Guam) but not oth- tax payments, include all income tax with- bor or Personal Services in chapter 2. erwise a U.S. citizen or a U.S. resident alien held and paid to either Guam or the United If you are a citizen or resident alien of the during the tax year, file your income tax return States, any credit for an overpayment of in- United States but not a bona fide resident of with Guam. Include income from worldwide come tax to either Guam or the United Guam during the tax year and you are not in- sources on your Guam return. Take into ac- States, and any payments of estimated tax cluding a check or money order, send your U.S. count tax withheld by both jurisdictions in deter- to either Guam or the United States. Pay tax return and all attachments (including Form mining if there is tax overdue or an overpay- any balance of tax due with your tax return. 5074) to: ment. Pay any balance of tax due with your tax • Generally, if you properly file your return return. with, and fully pay your income tax to, Department of the Treasury Guam, then you are not liable for filing an Internal Revenue Service If you are a citizen of Guam, send your re- income tax return with, or for paying tax to, Austin, TX 73301-0215 turn and all attachments to: the United States. However, if you were USA self-employed in 2020, see Self-employ- Department of Revenue and Taxation ment tax, later. If you are including a check or a money or- Taxpayer Services Division der, send your U.S. tax return and all attach- P.O. Box 23607 Example. Gary Barker was a bona fide res- ments (including Form 5074) to: GMF, Guam 96921 ident of Guam for 2020. He received wages of $25,000 paid by a private employer in Guam

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Special Rules for Guam Generally, expenses of a move to Guam are Department of Revenue and Taxation directly attributable to wages, salaries, and Taxpayer Services Division Special rules apply to certain types of income, other earned income from Guam. Likewise, the P.O. Box 23607 employment, and filing status. expenses of a move back to the United States GMF, Guam 96921 are generally attributable to U.S. earned in- Joint return. If you file a joint return, you come. To get information on paying electronically should file your return (and pay the tax) with the If your move was to Guam, report your de- (by credit or debit card, or through the Elec- jurisdiction where the spouse who has the duction for moving expenses as follows. tronic Federal Tax Payment System (EFTPS)), greater adjusted gross income (AGI) would • If you are a bona fide resident in the tax go to IRS.gov/Payments. have to file if you were filing separately. If the year of your move, enter your deductible For information on making estimated in- spouse with the greater AGI is a bona fide resi- expenses on your Guam tax return. come tax payments to the Department of Reve- dent of Guam during the tax year, file the joint • If you are not a bona fide resident, enter nue and Taxation, see Where To Get Forms return with Guam. If the spouse with the greater your deductible expenses on Form 3903, and Information, earlier. AGI is a U.S. citizen or resident alien but not a and enter the deductible amount on bona fide resident of Guam during the tax year, Schedule 1 (Form 1040), line 13, and on Double Taxation file the joint return with the United States. For Form 5074, line 20. this purpose, income is determined without re- If your move was to the United States, com- A mutual agreement procedure exists to settle gard to community property laws. plete Form 3903, and enter the deductible cases of double taxation between the United amount on Schedule 1 (Form 1040), line 13. Example. Bill Whiting, a U.S. citizen, was a States and Guam. See Double Taxation in resident of the United States, and his spouse, a Self-employment tax. If you have no U.S. fil- chapter 4. citizen of both Guam and the United States, ing requirement, but have income that is effec- was a bona fide resident of Guam during the tax tively connected with a trade or business in year. Bill earned $45,000 as an engineer in the Guam, you must file Form 1040-SS with the The U.S. Virgin Islands United States. His spouse earned $15,000 as a United States to report your self-employment in- teacher in Guam. Bill and his spouse will file a come and, if necessary, pay self-employment The USVI has its own tax system based on the joint return. Because Bill has the greater AGI, tax. same tax laws and tax rates that apply in the he and his spouse must file their return with the United States. An important factor in USVI taxa- United States and report the entire $60,000 on Additional Medicare Tax. You may be re- tion is whether, during the tax year, you are a that return. quired to pay Additional Medicare Tax. Also, bona fide resident of the USVI. you may need to report Additional Medicare U.S. Armed Forces. If you are a member of Tax withheld by your employer. For more infor- Where To Get Forms and the U.S. Armed Forces on active duty who mation, see Additional Medicare Tax under qualified as a bona fide resident of Guam in a Special Rules for Completing Your U.S. Tax Information prior tax year, your absence from Guam solely Return in chapter 4. For information about filing your USVI in compliance with military orders will not tax return or about Form 1040INFO in change your bona fide residency. If you did not Estimated tax payments. To see if you are St. Thomas, contact: qualify as a bona fide resident of Guam in a required to make payments of estimated in- prior tax year, your presence in Guam solely in come tax, self-employment tax, and/or Addi- Virgin Islands Bureau of Internal Revenue compliance with military orders will not qualify tional Medicare Tax to the IRS, see Form 6115 Estate Smith Bay you as a bona fide resident of Guam. 1040-ES. Suite 225 Civilian spouse of active duty member Payment of estimated tax. If you must St. Thomas, USVI 00802 of the U.S. Armed Forces. If, under the rule pay estimated tax, make your payment to the discussed at the beginning of chapter 1 (see jurisdiction where you would file your income Special rule for civilian spouse of active duty tax return if your tax year were to end on the You can order forms and publications member of the U.S. Armed Forces), your tax date your first estimated tax payment is due. by calling 340-715-1040. residence is Guam, follow the guidance in the Generally, you should make the rest of your section for bona fide residents under Which Re- quarterly payments of estimated tax to the juris- You can order forms and publications turn To File, earlier. However, if your tax resi- diction where you made your first payment of through fax at 340-774-2672. dence is one of the 50 states or the District of estimated tax. However, estimated tax pay- Columbia and your only income from Guam is ments to either jurisdiction will be treated as from wages, salaries, tips, or self-employment, payments to the jurisdiction with which you file you will be taxed on your worldwide income and the tax return. For information about filing your USVI tax return file only a U.S. tax return (Form 1040 or If you make a joint payment of estimated tax, or about Form 1040INFO in St. Croix, contact: 1040-SR) and a state and/or local tax return, if make your payment to the jurisdiction where the required. If you have income from Guam other spouse who has the greater estimated AGI Virgin Islands Bureau of Internal Revenue than wages, salaries, tips, or self-employment would have to pay (if a separate payment were 4008 Estate Diamond Plot 7-B that is considered to be sourced in that territory made). For this purpose, income is determined Christiansted, USVI 00820-4421 (see Table 2-1), you may need to file Form without regard to community property laws. 5074 with your U.S. tax return. You can order forms and publications The spouse of the service member may Early payment. If you make your first pay- by calling 340-773-1040. elect to use the same residence for tax purpo- ment of estimated tax early, follow the rules ses as the service member regardless of the given earlier to determine where to send it. If date on which the marriage of the spouse and you send it to the wrong jurisdiction, make all You can order forms and publications service member occurred. later payments to the jurisdiction to which the through fax at 340-773-1006. first payment should have been sent. To pay by check or money order, send your Moving expense deduction. The deduction You can access the USVI website at payment with the Form 1040-ES payment for moving expenses is suspended unless you http://bir.vi.gov/. are a member of the U.S. Armed Forces who voucher to: moves pursuant to a military order and incident to a permanent change of station. For more in- The addresses and phone numbers lis- formation, see Pub. 3. If you meet these re- ! ted above are subject to change. quirements, see the discussion below. CAUTION

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Which Return To File File your original Form 1040 or 1040-SR Nonresident Alien (Other Than a with the United States and file a signed copy of Bona Fide Resident of the U.S. In general, bona fide residents of the USVI pay the U.S. return (including all attachments, Virgin Islands) income taxes only to the USVI. U.S. citizens or forms, and schedules) with the U.S. Virgin Is- resident aliens (but not bona fide residents of lands Bureau of Internal Revenue by the due If you are a nonresident alien of the United the USVI) with USVI source income pay a por- date for filing Form 1040 or 1040-SR. Use Form States who does not qualify as a bona fide resi- tion of the tax to each jurisdiction. 8689 to figure the amount of tax you must pay dent of the USVI for the tax year, you must gen- to the USVI. erally file the following returns. • A USVI tax return reporting only your in- Bona Fide Resident of the U.S. Form 8689. Complete this form and attach it to Virgin Islands come from sources within the USVI. In this both the return you file with the United States situation, wages for services performed in and the copy you file with the USVI. Figure the File your tax return with the USVI if you are a the USVI, whether for a private employer, amount of tax you must pay to the USVI as fol- the U.S. government, or otherwise, are in- U.S. citizen, resident alien, or nonresident alien lows: and a bona fide resident of the USVI during the come from sources within the USVI. tax year. . . • A U.S. tax return (Form 1040-NR) report- • Include your worldwide income on your Total tax on ing U.S. source income according to the USVI return. In determining your total tax U.S. return USVI AGI rules for a nonresident alien. See the In- × structions for Form 1040-NR. payments, take into account all income tax (after certain Worldwide AGI withheld and paid to either the USVI or the adjustments) United States, any credit for an overpay- If you are not a bona fide resident of the ment of income tax to either the USVI or Pay any tax due to the USVI when you file USVI during the tax year, and you are not in- the United States, and any payments of your return with the U.S. Virgin Islands Bureau cluding a check or a money order, send your estimated tax to either the USVI or the Uni- of Internal Revenue. To receive credit on your U.S. tax return and all attachments (including ted States. Pay any balance of tax due with U.S. return for taxes paid to the USVI, include Form 8689) to: your tax return. Filing this return with the the amounts from Form 8689, lines 40 and 45, USVI generally also starts the statute of in the total on Form 1040 or 1040-SR, line 19. Department of the Treasury limitations on assessment of your U.S. in- On the dotted line next to line 19, enter “Form Internal Revenue Service come tax. 8689” and show the amounts. Austin, TX 73301-0215 • You generally do not have to file with the See the Illustrated Example of Form 8689 in USA United States for any tax year in which you chapter 5. are a bona fide resident of the USVI during If you are including a check or a money or- the tax year, provided you report and pay De minimis exception to determining der, send your U.S. tax return and all attach- tax on your income from all sources to the source of income. In certain situations, you ments (including Form 8689) to: USVI and identify the source(s) of the in- will not have income from a territory. See De come on the return. minimis exception under Compensation for La- Internal Revenue Service • If you have self-employment income, you bor or Personal Services in chapter 2. P.O. Box 1303 may be required to file Form 1040-SS with If you are not a bona fide resident of the Charlotte, NC 28201-1303 the United States. For more information, USVI during the tax year, but you have USVI USA see Self-employment tax under Special source income, and you are not including a Rules for the U.S. Virgin Islands, later. check or a money order, file Form 1040 or Send your USVI tax return and all attach- 1040-SR and all attachments (including Form ments to: Form 1040INFO. If you are a bona fide resi- 8689) with the: dent of the USVI and have non-USVI source in- Bureau of Internal Revenue come, you must also file Virgin Islands Form Department of the Treasury 6115 Estate Smith Bay 1040INFO, Non-Virgin Islands Source Income Internal Revenue Service St. Thomas, USVI 00802 of Virgin Islands Residents, with the U.S. Virgin Austin, TX 73301-0215 Islands. Attach Form 1040INFO to your USVI USA tax return before filing. You can get Form Special Rules for the U.S. 1040INFO by contacting the address or website If you are including a check or a money or- Virgin Islands given earlier. der, send your U.S. tax return and all attach- If you are a bona fide resident of the USVI ments (including Form 8689) to: There are some special rules for certain types for the tax year, file your return and all attach- of income, employment, and filing status. ments with the U.S. Virgin Islands Bureau of In- Internal Revenue Service ternal Revenue at: P.O. Box 1303 Joint return. If you file a joint return, you Charlotte, NC 28201-1303 should file your return (and pay the tax) with the Bureau of Internal Revenue USA jurisdiction where the spouse who has the 6115 Estate Smith Bay greater adjusted gross income (AGI) would St. Thomas, USVI 00802 File a copy of your U.S. Form 1040 or have to file if you were filing separately. If the 1040-SR with the U.S. Virgin Islands Bureau of spouse with the greater AGI is a bona fide resi- U.S. Citizen or Resident Alien Internal Revenue at: dent of the USVI during the tax year, file the (Other Than a Bona Fide Resident joint return with the USVI. If the spouse with the of the U.S. Virgin Islands) Bureau of Internal Revenue greater AGI is a U.S. citizen or resident alien of 6115 Estate Smith Bay the United States but not a bona fide resident of If you are a U.S. citizen or resident alien but not St. Thomas, USVI 00802 the USVI during the tax year, file the joint return a bona fide resident of the USVI during the tax with the United States. For this purpose, in- year, you must file your original Form 1040 or come is determined without regard to commun- 1040-SR with the United States and an identical ity property laws. copy of that return with the USVI if you have: Example. Marge Birch, a U.S. citizen, was • Income from sources in the USVI, or a resident of the United States, and her spouse, • Income effectively connected with the con- a citizen of both the USVI and the United duct of a trade or business in the USVI. States, was a bona fide resident of the USVI during the tax year. Marge earned $55,000 as an architect in the United States. Her spouse

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earned $30,000 as a librarian in the USVI. Self-employment tax. If you have no U.S. fil- Marge and her spouse will file a joint return. Be- ing requirement, but have income that is effec- cause Marge has the greater AGI, she and her tively connected with a trade or business in the spouse must file their return with the United USVI, you must file Form 1040-SS with the Uni- 4. States and report the entire $85,000 on that re- ted States to report your self-employment in- turn. come and, if necessary, pay self-employment tax. U.S. Armed Forces. If you are a member of Filing U.S. Tax the U.S. Armed Forces on active duty who Additional Medicare Tax. You may be re- qualified as a bona fide resident of the USVI in a quired to pay Additional Medicare Tax. Also, Returns prior tax year, your absence from the USVI you may need to report Additional Medicare solely in compliance with military orders will not Tax withheld by your employer. For more infor- The information in chapter 3 will tell you if a U.S. change your bona fide residency. If you did not mation, see Additional Medicare Tax under income tax return is required for your situation. qualify as a bona fide resident of the USVI in a Special Rules for Completing Your U.S. Tax If a U.S. return is required, your next step is to prior tax year, your presence in the USVI solely Return in chapter 4. see if you meet the filing requirements. If you do in compliance with military orders will not qualify meet the filing requirements, the information you as a bona fide resident of the USVI. Estimated tax payments. To see if you are presented in this chapter will help you under- required to make payments of estimated in- stand the special procedures involved. This Civilian spouse of active duty member of come tax, self-employment tax, and/or Addi- chapter discusses: the U.S. Armed Forces. If, under the rule dis- tional Medicare Tax to the IRS, get Form • Filing requirements, cussed at the beginning of chapter 1 (see Spe- 1040-ES. • When to file your return, cial rule for civilian spouse of active duty mem- To pay by check or money order, send your • Where to send your return, ber of the U.S. Armed Forces), your tax payment with the Form 1040-ES payment • How to adjust your deductions and credits residence is the USVI, follow the guidance in voucher to: if you are excluding income from American Bona Fide Residents of the U.S. Virgin Islands Samoa or Puerto Rico, under Which Return To File, earlier. However, if Bureau of Internal Revenue • How to make estimated tax payments and your tax residence is one of the 50 states or the 6115 Estate Smith Bay pay self-employment tax, and District of Columbia and your only income from St. Thomas, USVI 00802 • How to request assistance in resolving in- the USVI is from wages, salaries, tips, or stances of double taxation. self-employment, you will be taxed on your To get information on paying electronically worldwide income and file only a U.S. tax return (by credit or debit card, or through the Elec- (Form 1040 or 1040-SR) and a state and/or lo- tronic Federal Tax Payment System (EFTPS)), Who Must File cal tax return, if required. If you have income go to IRS.gov/Payments. from the USVI other than wages, salaries, tips, For information on making estimated in- If you are not required to file a territory tax return or self-employment that is considered to be come tax payments to the Bureau of Internal sourced in that territory (see Table 2-1), you that includes your worldwide income, you must Revenue, see Where To Get Forms and Infor- generally file a Form 1040 or 1040-SR U.S. in- may need to file Form 8689 with your U.S. tax mation, earlier. return. In this case, follow the guidance under come tax return if your gross income is at least U.S. Citizen or Resident Alien (Other Than a the amount shown in Table 4-1, for your filing Extension of time to file. You can get an au- status and age. Use the Instructions for Forms Bona Fide Resident of the U.S. Virgin Islands), tomatic 6-month extension of time to file your earlier. 1040 and 1040-SR to help you complete Form tax return. See Extension of Time To File in 1040 or 1040-SR. The spouse of the service member may chapter 4. Bona fide residents of the USVI dur- elect to use the same residence for tax purpo- ing the tax year must file a paper Form 4868 As discussed in chapter 3, bona fide resi- ses as the service member regardless of the with the U.S. Virgin Islands Bureau of Internal dents of the CNMI, Guam, and the U.S. Virgin date on which the marriage of the spouse and Revenue. Nonresidents of the USVI should file Islands do not generally have an income tax fil- service member occurred. separate extension requests with the IRS and ing requirement with the IRS. Bona fide resi- the U.S. Virgin Islands Bureau of Internal Reve- dents of American Samoa and Puerto Rico may Moving expense deduction. The deduction nue and make any payments due to the respec- have to file an income tax return with the IRS, for moving expenses is suspended unless you tive jurisdictions. However, the U.S. Virgin Is- the territory tax department, or both, as dis- are a member of the U.S. Armed Forces who lands Bureau of Internal Revenue will honor an cussed in chapter 3. These individuals will have moves pursuant to a military order and incident extension request that is timely filed with the to file an income tax return with the IRS if they to a permanent change of station. For more in- IRS. have income that is sourced outside the terri- formation, see Pub. 3. If you meet these re- tory in an amount that exceeds U.S. filing re- quirements, see the discussion below. quirements. Double Taxation Generally, expenses of a move to the USVI Some individuals (such as those who can be are directly attributable to wages, salaries, and claimed as a dependent on another person's re- other earned income from the USVI. Likewise, A mutual agreement procedure exists to settle cases of double taxation between the United turn or who owe certain taxes, such as self-em- the expenses of a move back to the United ployment tax) must file a tax return even though States are generally attributable to U.S. earned States and the U.S. Virgin Islands. See Double Taxation in chapter 4. the gross income is less than the amount income. shown in Table 4-1 for their filing status and If your move was to the USVI, report your age. For more information, see the Instructions deduction for moving expenses as follows. for Forms 1040 and 1040-SR. • If you are a bona fide resident in the tax year of your move, enter your deductible expenses on your USVI tax return. Filing Requirement for U.S. • If you are not a bona fide resident, enter Income Tax Return if your deductible expenses on Form 3903, Territory Income Is Excluded and enter the deductible amount on Schedule 1 (Form 1040), line 13, and on Bona fide residents of American Samoa or Pu- Form 8689, line 20. erto Rico are required to file a U.S. income tax If your move was to the United States, com- return if they have gross income subject to U.S. plete Form 3903, and enter the deductible income tax in an amount that equals or exceeds amount on Schedule 1 (Form 1040), line 13. the applicable filing requirement. The filing re- quirement is generally based on the standard

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deduction amount used to file a U.S. income tax If you or your spouse was born before Janu- Gross income subject to U.S. income return shown in Table 4-1. ary 2, 1956, or either of you is blind, figure your tax standard deduction using the Standard Deduc- You must adjust the standard deduction tion Chart for People Who Were Born Before Gross income from all sources amount based on the percentage of gross in- January 2, 1956, or Were Blind in the Instruc- (including excluded territory income) come subject to U.S. income tax over gross in- tions for Forms 1040 and 1040-SR. come from all sources (including excluded terri- Example. Barbara Spruce, a U.S. citizen, is tory income) to determine whether you meet the Allowable standard deduction. Unless your single, under 65, and a bona fide resident of filing requirement for a U.S. income tax return. filing status is married filing separately, or mar- American Samoa. During 2020, she received To make this determination, follow the instruc- ried filing jointly but you did not live with your $20,000 of income from American Samoa sour- tions and examples below. spouse at the end of 2020 (or on the date your ces (qualifies for exclusion) and $8,000 of in- spouse died), the minimum income level at come from sources outside the territory (subject Standard deduction amount. For 2020, the which you must file a return is generally based to U.S. income tax). Her allowable standard de- standard deduction amounts for all taxpayers on the standard deduction for your filing status duction for 2020 is figured as follows: are: and age. Because the standard deduction ap-

plies to all types of income, it must be divided . . Single or Married filing $12,400 between your excluded income and income $12,400 separately from other sources. Multiply the regular stand- $8,000 (regular × = $3,543 Head of household $18,650 ard deduction for your filing status and age by $28,000 standard Married filing jointly or $24,800 the following fraction: deduction) Qualifying widow(er)

Table 4-1. 2020 Filing Requirements Chart for Most Taxpayers

THEN file a return if your gross income** IF your filing status is... AND at the end of 2020 you were*... was at least... Single under 65 $12,400 65 or older $14,050 Married filing jointly*** under 65 (both spouses) $24,800 65 or older (one spouse) $26,100 65 or older (both spouses) $27,400 Married filing separately any age $5 Head of household under 65 $18,650 65 or older $20,300 Qualifying widow(er) under 65 $24,800 65 or older $26,100

* If you were born on January 1, 1956, you are considered to be age 65 at the end of 2020. (If your spouse died in 2020 or if you are preparing a return for someone who died in 2020, see Pub. 501.) ** Gross income means all income you received in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States or from the sale of your main home (even if you can exclude part or all of it). Do not include social security benefits unless (a) you are married filing a separate return and you lived with your spouse at any time during 2020, or (b) one-half of your social security benefits plus your other gross income and any tax-exempt interest is more than $25,000 ($32,000 if married filing jointly). If (a) or (b) applies, see the Instructions for Forms 1040 and 1040-SR or Pub. 915 to figure the taxable part of social security benefits you must include in gross income. Gross income includes gains, but not losses, reported on Form 8949 or Schedule D. Gross income from a business means, for example, the amount on Schedule C, line 7, or Schedule F, line 9. But, in figuring gross income, do not reduce your income by any losses, including any loss on Schedule C, line 7, or Schedule F, line 9. *** If you did not live with your spouse at the end of 2020 (or on the date your spouse died) and your gross income was at least $5, you must file a return regardless of your age.

Example 1. James and Joan Thompson, The Thompsons have to file a U.S. income tax one over 65, are U.S. citizens and bona fide return because their gross income subject to residents of Puerto Rico during the tax year. U.S. tax ($6,000) is more than their allowable When To File They file a joint income tax return. During 2020, standard deduction. ($6,000 – $3,761 = they received $35,000 of income from Puerto $2,180). If you file on a calendar year basis, the due date Rico sources (qualifies for exclusion) and for filing your U.S. income tax return is April 15 $6,000 of income from sources outside Puerto Example 2. Barbara Spruce (see Example following the end of your tax year. If you use a Rico (subject to U.S. income tax). Their allowa- under Allowable standard deduction, earlier) fiscal year (a year ending on the last day of a ble standard deduction for 2020 is figured as must file a U.S. income tax return because her month other than December), the due date is follows: gross income subject to U.S. tax ($8,000) is the 15th day of the 4th month after the end of more than her allowable standard deduction your fiscal year. If any due date falls on a Satur- ($3,543). day, Sunday, or legal holiday, your tax return is $26,100 due on the next business day. (standard If you must file a U.S. income tax re- $6,000 deduction TIP turn, you may be able to file electroni- For your 2020 tax return, the due date is × = $3,820 $41,000 for 65 or cally using IRS.gov/Efile. See the In- April 15, 2021. older (one structions for Forms 1040 and 1040-SR or visit If you mail your federal tax return, it is con- spouse)) IRS.gov. sidered timely if it bears an official postmark dated on or before the due date, including any

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extensions. If you use a private delivery service a. You are living outside of the United designated by the IRS, generally the postmark States and Puerto Rico, and your date is the date the private delivery service re- main place of business or post of duty Where To File cords in its database or marks on the mailing la- is outside the United States and Pu- bel. Go to IRS.gov/PDS for the current list of erto Rico; or Use the addresses listed below if you have to designated private delivery services. file Form 1040 or 1040-SR with the United b. You are in military or naval service on States and you are excluding territory income duty outside the United States and from American Samoa or Puerto Rico. Extension of Time To File Puerto Rico. If you are not including a check or a money You can get an extension of time to file your However, if you pay the tax due after the order, send your U.S. tax return and all attach- U.S. income tax return. Special rules apply for regular due date (generally, April 15), interest ments to: those living outside the United States. will be charged from April 15 until the date the tax is paid. Department of the Treasury Internal Revenue Service Automatic 6-Month Extension Austin, TX 73301-0215 If you serve in a combat zone or qualified USA If you cannot file your 2020 return by the due hazardous duty area, you may be eligible for a date, you can get an automatic 6-month exten- longer extension of time to file. For more infor- sion of time to file. mation, see Pub. 3. If you are including a check or a money or- der, send your U.S. tax return and all attach- Example. If your return must be filed by Married taxpayers. If you file a joint return, ments to: April 15, 2021, you will have until October 15, only one spouse has to qualify for this auto- 2021, to file. matic extension. However, if you and your Internal Revenue Service spouse file separate returns, this automatic ex- P.O. Box 1303 Although you are not required to make tension applies only to the spouse who quali- Charlotte, NC 28201-1303 a payment of the tax you estimate as ! fies. USA CAUTION due, Form 4868 does not extend the time to pay taxes. If you do not pay the amount How to get the extension. To use this special Send your U.S. return to these ad- due by the regular due date (generally, April automatic extension, you must attach a state- dresses if you are attaching Form 5074 15), you will owe interest on any unpaid tax ment to your return explaining what situation or Form 8689. If you are not in either of from the original due date to the date you pay qualified you for the extension. (See the situa- the above categories, send your return to the the tax. You may also be charged penalties tions listed in item 2 in the list above.) address shown in the Instructions for Forms (see Form 4868). 1040 and 1040-SR for the territory or state in Extension beyond 2 months. If you cannot which you reside. How to get the automatic extension. You file your 2020 return within the automatic can get the automatic 6-month extension if you 2-month extension period, you can get an addi- do one of the following by the due date for filing tional 4-month extension, for a total of 6 your return. months. File Form 4868 by the end of the auto- Special Rules for • E-file Form 4868 using your personal com- matic extension period (June 15, 2021, for cal- Completing Your U.S. puter or a tax professional. endar year taxpayers). Be sure to check the box • E-file and pay by credit or debit card. Your on Form 4868, line 8, if appropriate. Tax Return payment must be at least $1. You may pay Extension beyond 6 months. In addition by phone or over the Internet. Do not file The following rules may apply if you are re- to this 6-month extension, taxpayers who are Form 4868. quired to file a U.S. federal income tax return. • File a paper Form 4868. If you are a fiscal out of the country (as defined in item 2 in the list year taxpayer, you must file a paper Form above) can request a discretionary 2-month ad- Earned income credit. If you are not exclud- 4868. ditional extension of time to file their returns (to ing territory income from your U.S. tax return, December 15, 2021, for calendar year taxpay- follow the Instructions for Forms 1040 and See Form 4868 for information on getting an ers). extension using these options. 1040-SR. However, you may not qualify to To request this extension, you must send claim the earned income credit (EIC). the IRS a letter explaining the reasons why you Even if you maintain a household in one of When to file. You must request the automatic need the additional 2 months. Send the letter by the territories discussed in this publication that extension by the due date for your return. You the extended due date (October 15 for calendar is your main home and the home of your quali- can file your return any time before the 6-month year taxpayers) to: extension period ends. fying child, you cannot claim the EIC on your U.S. tax return. This credit is available only if Department of the Treasury you maintain the household in the United States When you file your return. Enter any pay- Internal Revenue Service or you are serving on extended active duty in ment you made related to the extension of time Austin, TX 73301-0215 the U.S. Armed Forces. to file on Schedule 3 (Form 1040), line 10. USA You cannot ask the IRS to figure your U.S. Armed Forces. U.S. military person- TIP tax if you use the extension of time to You will not receive any notification from the nel stationed outside the United States on ex- file. IRS unless your request is denied for being un- tended active duty are considered to live in the timely. United States during that duty period for purpo- ses of the EIC. Extended active duty means you Individuals Outside the United are called or ordered to duty for an indefinite States and Puerto Rico Taxpayers Affected by Federally Declared Disasters period or for a period of more than 90 days. Once you begin serving your extended active You are allowed an automatic 2-month exten- To find information on the most recent tax relief duty, you are still considered to have been on sion (until June 15, 2021, if you use the calen- provisions for taxpayers affected by disaster sit- extended active duty even if you do not serve dar year) to file your 2020 return and pay any uations see Tax Relief in Disaster Situations. more than 90 days. federal income tax due if: See Pub. 547 for discussions on the special Income from American Samoa or Puerto 1. You are a U.S. citizen or resident; and rules that apply to federally declared disaster Rico excluded. You will not be allowed to take areas. 2. On the due date of your return: deductions and credits that apply to the

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excluded income. The additional information This would happen if, for instance, you have Itemized Deductions you need follows. two businesses and only the income from one of them is excludable. Disaster tax relief. If you had a net qualified Deductions if Territory For purposes of the deduction only, figure disaster loss resulting from certain federally de- the self-employment tax on the nonexcluded in- clared disasters (see IRS.gov/ Income Is Excluded come by multiplying your total self-employment DisasterTaxRelief), you may be allowed to tax (from Schedule SE (Form 1040)) by the fol- claim the net qualified disaster loss on Sched- Deductions that specifically apply to your exclu- lowing fraction: ule A (Form 1040). Also, if certain requirements ded territory income are not allowable on your are met, you may be able to make an election to U.S. income tax return. deduct the loss in 2019. Self-employment income To figure your net qualified disaster loss, Deductions that do not specifically apply to subject to U.S. income tax see Form 4684 and its instructions. For more in- any particular type of income must be divided Total self-employment income formation on how to report a net qualified disas- between your excluded income from sources in (including excluded territory income) ter loss as an itemized deduction, see the the relevant territory and income from all other Instructions for Schedule A (Form 1040). sources to find the part that you can deduct on The result is your self-employment tax on non- your U.S. tax return. Examples of such deduc- excluded income. Include the deductible part of Most itemized deductions do not apply to a par- tions are alimony payments, the standard de- this amount on Schedule 1 (Form 1040), ticular type of income. However, itemized de- duction, and certain itemized deductions (such line 14. ductions can be divided into three categories. as medical expenses, charitable contributions, • Those that apply specifically to excluded real estate taxes, and mortgage interest on your Individual retirement arrangement (IRA) de- income are not deductible. home). duction. Do not take excluded income into ac- • Those that apply specifically to income count when figuring your deductible IRA contri- subject to U.S. income tax are fully allowa- Note. Under section 11051 of P.L. 115-97 bution. ble under the Instructions for Schedule A (TCJA), alimony payments are no longer de- (Form 1040). ductible if the divorce or separation agreement • Those that do not apply to specific income is executed after December 31, 2018, or if exe- Standard Deduction must be allocated between your gross in- cuted before January 1, 2019, but modified af- come subject to U.S. income tax and your ter December 31, 2018, the modification must Disaster tax relief. If you are allowed to claim total gross income from all sources. state that section 11051 of P.L. 115-97 applies the standard deduction, and you had a net to the modification. qualified disaster loss resulting from certain fed- erally declared disasters (see IRS.gov/ The example given later shows how to figure the deductible part of each type of expense that Figuring the deduction. To find the part of a DisasterTaxRelief), you can elect to increase is not related to specific income. deduction that is allowable, multiply the deduc- your standard deduction by the amount of your tion by the following fraction: net qualified disaster loss. You must report your increased standard deduction on Schedule A Example. In 2020, you and your spouse (Form 1040). are both under 65 and U.S. citizens who are bona fide residents of Puerto Rico during the Gross income subject to U.S. income To figure your net qualified disaster loss, tax year. You file a joint income tax return. Dur- tax see Form 4684 and its instructions. For more in- ing 2020, you earned $24,000 from Puerto Rico formation on how to report the increased stand- Gross income from all sources sources (excluded from U.S. gross income) and ard deduction, see the instructions for line 16 of (including excluded territory income) your spouse earned $96,000 from the U.S. gov- Schedule A (Form 1040) in the Instructions for ernment. You have $42,250 of itemized deduc- Schedule A (Form 1040). Adjustments to Income tions that do not apply to any specific type of in- come. These are medical expenses of $11,000, The standard deduction is composed of the real estate taxes of $10,000, home mortgage in- Your adjusted gross income equals your gross regular standard deduction amount and the ad- terest of $16,250, and charitable contributions income minus certain deductions (adjust- ditional standard deduction for taxpayers who of $5,000 (cash contributions). You determine ments). are blind or age 65 or over. the amount of each deduction that you can Moving expense deduction. The deduction To find the amount you can claim on Form claim on your Schedule A (Form 1040), Item- for moving expenses is suspended unless you 1040 or 1040-SR, line 12, first figure your full ized Deductions, by multiplying the deduction are a member of the U.S. Armed Forces who standard deduction according to the Instruc- by the fraction shown under Figuring the deduc- moves pursuant to a military order and incident tions for Forms 1040 and 1040-SR. Then multi- tion, earlier, under Deductions if Territory In- to a permanent change of station. For more in- ply your full standard deduction by the following come Is Excluded. formation, see the separate discussions of the fraction: moving expense deduction for each territory in Medical Expenses chapter 3. $96,000 $8,800 Gross income subject to U.S. income $120,000 × $11,000 = (enter on line 1 Self-employment tax deduction. Generally, if tax of Schedule A) you are reporting self-employment income on Gross income from all sources your U.S. return, you can include the deductible . . (including excluded territory income) Real Estate Taxes part of your self-employment tax on Schedule 1 $8,000 (Form 1040), line 14. This is an income tax de- $96,000 × $10,000 = (enter on line 5b In the space above line 9, enter “Standard $120,000 duction only; it is not a deduction in figuring net of Schedule A) earnings from self-employment (for self-em- deduction modified due to income excluded un- der section 931 (if American Samoa) or section ployment tax). . . 933 (if Puerto Rico).” However, if you are a bona fide resident of Home Mortgage Interest American Samoa or Puerto Rico and you ex- This calculation may not be the same $13,000 $96,000 (enter on clude all of your self-employment income from ! as the one you used to determine if you × $16,250 = gross income, you cannot take the deduction on CAUTION need to file a U.S. tax return. $120,000 line 8a of Schedule 1 (Form 1040), line 14, because the Schedule A) deduction is related to excluded income. If only part of your self-employment income is excluded, the part of the deduction that is based on the nonexcluded income is allowed.

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. . . If you are not required to file Form 1040 or Charitable Contributions (cash Taxable Excludable • 1040-SR with the United States and you contributions) Jason's wages from $96,000 $4,000 are a bona fide resident of American Sa- U.S. $120,000 × $5,000 = (enter on line 11 moa, the CNMI, Guam, Puerto Rico, or the of Schedule A) government ...... $25,000 USVI, file Form 1040-SS. If you are a resi- Lynn's wages from dent of Puerto Rico, you can file the Span- Puerto Rico ish-language Form 1040-PR instead. Do Enter on Schedule A (Form 1040) only the corp...... $15,000 not file Form 1040-SS or 1040-PR with allowable portion of each deduction. Dividend from Puerto Form 1040 or 1040-SR. Rico corp. doing • If you are required to pay Additional Medi- Foreign Tax Credit if business in Puerto care Tax (discussed later) on your self-em- Territory Income Is Excluded Rico ...... 200 ployment income, attach Form 8959 to Dividend from U.S. Form 1040, Form 1040-SR, Form If you must report American Samoa or Puerto corp. doing 1040-SS, or Form 1040-PR, as applicable. Rico source income on your U.S. tax return, you business Chapter 11 bankruptcy cases. While you are can claim a foreign tax credit for income taxes in U.S.* ...... 1,000 paid to the territory on that income. However, a debtor in a chapter 11 bankruptcy case, your you cannot claim a foreign tax credit for taxes Totals ...... $26,000 $15,200 net profit or loss from self-employment will be paid on territory income that is excluded on your included on the Form 1041 (income tax return) U.S. tax return. The foreign tax credit is gener- of the bankruptcy estate. However, you—not ally figured on Form 1116. * Income from sources outside Puerto Rico is the bankruptcy estate—are responsible for pay- taxable. ing self-employment tax on your net earnings If you have income, such as U.S. govern- from self-employment. ment wages, that is not excludable, and you Jason and Lynn must file 2020 income tax Use Schedule SE (Form 1040), Form also have territory source income that is exclud- returns with both Puerto Rico and the United 1040-SS, or Form 1040-PR, as determined able, you must figure the credit by reducing States. They have gross income of $26,000 for above, to figure your correct amount of self-em- your foreign taxes paid or accrued by the taxes U.S. tax purposes. They paid taxes to Puerto ployment tax. based on the excluded income. You make this Rico of $4,000 ($3,980 on their wages and $20 For other reporting requirements, see Chap- reduction for each separate income category. on the dividend from the Puerto Rico corpora- ter 11 Bankruptcy Cases in the Instructions for To find the amount of this reduction, use the fol- tion). They figure their foreign tax credit on two Forms 1040 and 1040-SR. lowing formula for each income category. Forms 1116, which they must attach to their U.S. return. They fill out one Form 1116 for wa- Excluded income ges (general category income) and one Form Additional Medicare Tax from territory 1116 for the dividend (passive category in- sources less come). Jason and Lynn figure the Puerto Rico A 0.9% Additional Medicare Tax applies to deductible expenses Tax paid taxes on excluded income as follows. Medicare wages, railroad retirement (RRTA) based on that income Reduction or accrued compensation, and self-employment income x = in foreign Total income to the that are more than $125,000 if married filing taxes Wages: ($15,000 ÷ $40,000) × $3,980 = $1,493 subject to territory territory separately; $250,000 if married filing jointly; or

tax less deductible Dividend: ($200 ÷ $200) × $20 = $20 $200,000 if single, head of household, or quali- expenses based on fying widow(er). that income Medicare wages and self-employment in- They enter $1,493 on Form 1116, line 12, come are combined to determine if income ex- Enter the amount of the reduction on Form for wages and $20 on the second Form 1116, ceeds the threshold. A self-employment loss 1116, line 12. line 12, for the dividend. should not be considered for purposes of this For more information on the foreign tax tax. RRTA compensation should be separately credit, see Pub. 514. Self-Employment Tax compared to the threshold.

Example. Jason and Lynn Reddy (both un- Self-employment tax includes both social secur- Your employer is responsible for withholding der 65) are U.S. citizens who were bona fide ity and Medicare taxes for individuals who are the 0.9% Additional Medicare Tax on Medicare residents of Puerto Rico during all of 2020. self-employed. wages or RRTA compensation it pays to you in They file a joint tax return. The following table excess of $200,000. You should consider this A U.S. citizen or resident alien who is withholding, if applicable, in determining shows their excludable and taxable income for self-employed must pay self-employment tax to U.S. federal income tax purposes. whether you need to make estimated tax pay- the IRS on net self-employment earnings of ments. $400 or more. This rule applies whether or not the earnings are excludable from gross income There are no special rules for U.S. citizens (or whether or not a U.S. income tax return must and nonresident aliens living abroad for purpo- otherwise be filed). Bona fide residents of the ses of this provision. Wages, RRTA compensa- territories discussed in this publication are con- tion, and self-employment income that are sub- sidered U.S. residents for this purpose and are ject to Medicare tax will also be subject to subject to the self-employment tax. Additional Medicare Tax if in excess of the ap- plicable threshold. Coronavirus tax relief. See Form 1040-SS For more information, see Form 8959 and its and its instructions regarding coronavirus tax instructions, or visit IRS.gov/ADMT. relief provisions applicable to filers of Form 1040-SS. You cannot include the Additional Med- ! icare Tax as a deductible part of your Forms to file. If you have net self-employment CAUTION self-employment tax. income and are subject to self-employment tax, file one of the following with the United States. • If you are required to file Form 1040 or Net Investment Income Tax 1040-SR with the United States, complete Schedule SE (Form 1040) and attach it to The Net Investment Income Tax (NIIT) imposes your Form 1040 or 1040-SR. a 3.8% tax on the lesser of an individual’s net

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investment income or the excess of the individ- Competent Authority on protective measures involving inconsisten- ual’s modified adjusted gross income over a cies in tax treatment by the IRS and a U.S. terri- specified threshold amount. Bona fide residents Assistance tory, available at IRS.gov/irb/ of Puerto Rico and American Samoa who may 2006-20_IRB#RP-2006-23. For additional infor- have a federal income tax return filing obligation The tax coordination agreements between the mation on protective claims related to requests may be liable for the NIIT if the taxpayer’s modi- United States and the territory tax departments for assistance arising under U.S. tax treaties, fied adjusted gross income from non-territory contain provisions allowing the competent au- see Revenue Procedure 2015-40, available at sources exceeds a specified threshold amount. thorities of the United States and the relevant IRS.gov/irb/2015-35_IRB#RP-2015-40. The NIIT does not apply to any individual who is territory to resolve, by mutual agreement, incon- a nonresident alien with respect to the United sistent tax treatment by the two jurisdictions. States. Bona fide residents must take into ac- count any additional tax liability associated with How to make your request. Your request for the NIIT when calculating the estimated tax competent authority assistance must be in the payments. If you are a bona fide resident of the form of a letter addressed to the Deputy Com- CNMI, Guam, or the USVI, you are not subject missioner (International) Large Business & In- 5. to NIIT. ternational Division. It must contain a statement that competent authority assistance is reques- Forms to file. If you are a bona fide resident of ted under the mutual agreement procedure with American Samoa or Puerto Rico and you are the territory. You (or a person having authority Illustrated required to pay the NIIT, you must file Form to sign your federal return) must sign and date 1040 or 1040-SR with the United States and at- the request. For more information, see Revenue tach Form 8960. For more information, see Procedure 2006-23, available at IRS.gov/irb/ Examples Form 8960 and its instructions. 2006-20_IRB#RP-2006-23. Go to IRS.gov/Individuals/International- Use the following examples to help you com- Taxpayers/Competent-Authority-Arrangements plete the correct attachment to your Form 1040 Paying Your Taxes for information on the Competent Authority Ar- or 1040-SR. The completed form for each ex- rangements for the territories. ample is shown on the pages that follow. You may find that not all of your income tax has Revenue Procedure 2015-40 includes been paid through withholding to either the Uni- TIP procedures for requests for assistance ted States or the territory. This is often true if from the U.S. competent authority aris- Illustrated Example of you have income that is not subject to withhold- ing under U.S. tax treaties. Procedures for re- ing, such as self-employment, interest, or rental questing assistance of the U.S. competent au- Form 4563 income. In this situation, you may need to make thority in addressing inconsistencies in tax John Black is a U.S. citizen, single, and under estimated tax payments. treatment by the IRS and a U.S. territory are un- 65. He was a bona fide resident of American der Revenue Procedure 2006-23, available at Samoa during all of 2020. John received IRS.gov/irb/2006-20_IRB#RP-2006-23. Estimated Tax $13,100 from the rental of a condominium he Nonresident aliens must generally owns in Florida, $24,000 of wages from a Sa- If your estimated income tax obligation is to the present their initial request for assis- moa Products Company for services performed United States, use the worksheet in Form ! in American Samoa, $220 in dividends from an CAUTION tance to the relevant territory tax 1040-ES to figure your estimated tax, including agency. American Samoa corporation, and $1,000 of self-employment tax. Include the Additional dividends from U.S. corporations. John must Medicare Tax and Net Investment Income Tax, Send your written request for U.S. as- file Form 1040 because his gross income from if applicable. If you are paying by check or sistance under this procedure to: U.S. sources is $14,100 ($13,100 rental income money order, use the payment vouchers in the and $1,000 of dividends), which is more than Form 1040-ES, or you can make your payments his filing requirement for single filers under 65 electronically and not have to file any paper Commissioner, Large Business ($12,400). (See Filing Requirement for U.S. In- forms. See Form 1040-ES for information on and International Division come Tax Return if Territory Income Is Exclu- making payments. Internal Revenue Service ded in chapter 4.) SE:LB:TTPO:TA:TAIT:NCA 570-03 John files Form 1040 (not illustrated) instead Double Taxation 1111 Constitution Avenue NW of Form 1040-SR as he is under 65. He fills out Washington, DC 20224 Form 4563 to determine the amount of income (Attention: TAIT) from American Samoa he can exclude. See Mutual agreement procedures exist to settle is- Bona Fide Resident of American Samoa in sues where there is inconsistent tax treatment chapter 3. between the IRS and the taxing authorities of the following territories. Credit or Refund Completing Form 4563. John enters his American Samoa. • name and social security number at the top of The Commonwealth of Puerto Rico. • In addition to the tax assistance request, if you the form. • The Commonwealth of the Northern Ma- seek a credit or refund of any overpayment of riana Islands. U.S. tax paid on the income in question, you Line 1. On Form 4563 (see later), John en- • Guam. should file a claim on Form 1040-X. Indicate on ters the date his bona fide residence began in • The U.S. Virgin Islands. the form that a request for assistance under the American Samoa, June 2, 2019. Because he is mutual agreement procedure with the territory still a bona fide resident, he enters “not ended” These issues usually involve allocations of has been filed. Attach a copy of the request to in the second blank space. income, deductions, credits, or allowances be- the form. tween related persons; determinations of resi- Line 2. He checks the box labeled “Rented dency; and determinations of the source of in- house or apartment” to describe his type of liv- Also, you should take whatever steps must come and related expenses. ing quarters in American Samoa. be taken under the territory tax code to prevent the expiration of the statutory period for filing a Lines 3a and 3b. He checks “No” on claim for credit or refund of a territory tax. line 3a because no family members lived with him. He leaves line 3b blank. See Revenue Procedure 2006-23 (or its successor), section 9, for complete information

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Lines 4a and 4b. He checks “Yes” on Form 1040 or 1040-SR. All amounts reported At the same time, they send a copy of their line 4a because he owns a rental property out- on Form 5074 are also reported on her Form Form 1040 with all attachments, including Form side American Samoa (Florida), which he rents 1040 or 1040-SR. See U.S. Citizen or Resident 8689, to the U.S. Virgin Islands Bureau of Inter- to an unrelated individual. He enters the rele- Alien (Other Than a Bona Fide Resident of nal Revenue. The U.S. Virgin Islands Bureau of vant information on line 4b. Guam) in chapter 3. Internal Revenue will process this copy.

Line 5. He enters the name and address of Completing Form 5074. Tracy enters her Completing Form 8689. Juan and Carla enter his employer, Samoa Products Co. It is a pri- name and social security number at the top of their names and Juan's social security number vate American Samoa corporation. the form. at the top of the form. Line 6. He enters the dates of his 2-week Part I. On Form 5074 (see later), Tracy en- Part I. The Morenos enter their income vacation to New Zealand from November 11 to ters her self-employment income from Guam from the USVI in Part I (see later). The interest November 25. That was his only trip outside ($20,000) on line 6. She has no other income income is entered on line 2 and the net rental American Samoa during the year. from Guam, so the total on line 16 is $20,000. income of $6,200 ($14,400 of rental income mi- nus $8,200 of rental expenses) is entered on Line 7. He enters the $24,000 in wages he Part II. Tracy's only adjustment in Part II is received from Samoa Products Co. line 11. The Morenos' total USVI income of the deductible part of the self-employment tax $6,700 is entered on line 16. Line 9. He received $220 in dividends from on her net income earned in Guam. She enters an American Samoa corporation, which he en- $1,413 on line 21 and line 29. Her adjusted Part II. The Morenos have no adjustments ters here. He also received $1,000 of dividends gross income on line 30 is $18,587. to their USVI income, so they enter zero (-0-) on from a U.S. corporation, but he will enter that line 29, and $6,700 on line 30. Their USVI ad- Part III. Tracy made estimated tax pay- justed gross income (AGI) is $6,700. amount only on his Form 1040 because the ments of $1,409. She enters this amount on U.S. dividends do not qualify for the territory ex- line 31, and again on line 35 as the total pay- Part III. On line 31, the Morenos enter the clusion. ments. amount from Form 1040, line 16 ($4,539). Their Line 12. John received $13,100 in rental in- Form 1040 does not show any entries required come from his condominium in Florida, but he on line 32, so they leave that line blank and en- will enter that amount only on his Form 1040 Illustrated Example of ter $4,539 on line 33. because the rental income does not qualify for The Morenos enter their worldwide AGI, the territory exclusion. Form 8689 $54,901 (Form 1040, line 11), on line 34. Next, they find what percentage of their AGI is from Line 15. John totals the amounts on lines 7 Juan and Carla Moreno live and work in the USVI sources ($6,700 ÷ $54,901 = 0.122) and and 9 to get the amount he can exclude from United States. In 2020, they received $14,400 enter that as a decimal on line 35. They then his gross income in 2020. He will not enter his in income from the rental of a condominium apply that percentage to the U.S. tax entered on excluded income on Form 1040. However, he they own in the USVI. The rental income was line 33 to find the amount of U.S. tax allocated will attach his completed Form 4563 to his Form deposited in a bank in the USVI and they re- to USVI income ($4,539 x 0.122 = $554), and 1040. ceived $500 of interest on this income. They enter that amount on line 36. were not bona fide residents of the USVI during the tax year. Part IV. Part IV is used to show payments Illustrated Example of of income tax to the USVI only. The Morenos The Morenos complete Form 1040 (not illus- had no tax withheld by the USVI, but made esti- Form 5074 trated) instead of Form 1040-SR as they are mated tax payments to the USVI of $400, which both under 65. They report their income from all they entered on lines 38 and 40. They include Tracy Grey is a U.S. citizen who is a self-em- sources, including their interest income and the this amount ($400) in the total payments on ployed fisheries consultant with a tax home in income and expenses from their USVI rental Form 1040, line 33. On the dotted line next to New York. Her only income for 2020 was net property (reported on Schedule E (Form 1040)). the entry space for line 33, they enter “Form self-employment income of $80,000. Of the The Morenos take the standard deduction for 8689” and show the amount. The Morenos do $80,000, $20,000 was from consulting work in married filing jointly, both under 65, and they not complete Form 1116 because they receive Guam and the rest was earned in the United have no dependents. credit on Form 1040, line 33, for the tax paid to States. Thinking she would owe income tax to the USVI. The Morenos also complete Form 8689 to Guam on the $20,000, Tracy made estimated The income tax they owe to the USVI ($154) determine how much of their U.S. tax shown on tax payments of $1,409 to Guam. She was not is shown on Form 8689, line 45. They enter this Form 1040, line 16 (with certain adjustments), a bona fide resident of Guam during 2020. amount on line 46. They also include this addi- must be paid to the USVI. See U.S. Citizen or tional amount ($154) on the dotted line next to Tracy completes Form 1040 or 1040-SR Resident Alien (Other Than a Bona Fide Resi- the entry space and in the total on Form 1040, (not illustrated), reporting her worldwide in- dent of the U.S. Virgin Islands) in chapter 3. line 33. The Morenos will pay their USVI tax at come. Because the adjusted gross income on the same time they file the copy of their U.S. in- her Form 1040 or 1040-SR was $50,000 or The Morenos file their Form 1040, attaching come tax return with the USVI. more and at least $5,000 of her gross income is Form 8689 and all other schedules, with the from Guam, Tracy must file Form 5074 with her IRS.

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Form 4563 (Revised August 2019), Exclusion of Income for Bona Fide Residents of American Samoa

Exclusion of Income for Bona Fide Residents OMB No. 1545-0074 Form 4563 of American Samoa (Rev. August 2019) ▶ Attach to Form 1040 or 1040-SR. Attachment Department of the Treasury Sequence No. 563 Internal Revenue Service ▶ Go to www.irs.gov/Form4563 for the latest information. Name(s) shown on Form 1040 or 1040-SR Your social security number John Black 111-00-1111 Part I General Information 1 Date bona de residence began ▶ 6-2-2019 , and ended ▶ not ended 2 Type of living quarters in Rented room  Rented house or apartment American Samoa Quarters furnished by employer Purchased home 3a Did any of your family live with you in American Samoa during any part of the tax year? ...... Yes  No b If “Yes,” who and for what period? ▶

4a Did you maintain any home(s) outside American Samoa? ......  Yes No b If “Yes,” show address of your home(s), whether it was rented, the name of each occupant, and his or her relationship to you. ▶ 800 Kennedy Street, Ft. Lauderdale, FL, rental condominium, Bob Wilson, unrelated

5 Name and address of employer (state if self-employed) ▶ Samoa Products Co., Pago Pago, American Samoa

6 Complete columns (a) through (d) below for days absent from American Samoa during the tax year.

(a) Date left (b) Date (c) Number of (d) Reason for absence returned days absent 11-11-2020 11-25-2020 14 Vacation to New Zealand

Part II Figure Your Exclusion. Include only income that quali es for the exclusion. See instructions. 7 Wages, salaries, tips, etc...... 7 24,000 8 Taxable interest ...... 8 9 Ordinary dividends ...... 9 220 10 Business income ...... 10 11 Capital gain ...... 11 12 Rental real estate, royalties, etc...... 12 13 Farm income ...... 13 14 Other income. List type and amount ▶ 14 15 Add lines 7 through 14. This is the amount you may exclude from your gross income this tax year ▶ 15 24,220 For Paperwork Reduction Act Notice, see instructions. Cat. No. 12909U Form 4563 (Rev. 8-2019)

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2020 Form 5074, Allocation of Individual Income Tax to Guam or the Commonwealth of the Northern Mariana Islands

Allocation of Individual Income Tax to Guam or the OMB No. 1545-0074 Form 5074 Commonwealth of the Northern Mariana Islands (CNMI) 2020 Department of the Treasury Go to www.irs.gov/Form5074 for the latest information. Attachment Internal Revenue Service Attach to Form 1040 or 1040-SR. Sequence No. 168 Name(s) shown on Form 1040 or 1040-SR Your social security number Tracy Grey 111-00-2222 Part I Income From Guam or the CNMI Reported on Form 1040, 1040-SR, or Schedule 1 (Form 1040), Part I Guam CNMI 1 Wages, salaries, tips, etc...... 1 2 Taxable interest ...... 2 3 Ordinary dividends ...... 3 4 Taxable refunds, credits, or offsets of local Guam or CNMI income taxes . . . . 4 5 Alimony received ...... 5 6 Business income or (loss) ...... 6 20,000 7 Capital gain or (loss) ...... 7 8 Other gains or (losses) ...... 8 9 IRA distributions (taxable amount) ...... 9 10 Pensions and annuities (taxable amount) ...... 10 11 Rental real estate, royalties, partnerships, S corporations, trusts, etc...... 11 12 Farm income or (loss) ...... 12 13 Unemployment compensation ...... 13 14 Social security bene ts (taxable amount) ...... 14 15 Other income. List type and amount 15 16 Total income. Add lines 1 through 15 ...... 16 20,000 Part II Adjustments to Income From Guam or the CNMI Reported on Form 1040, 1040-SR, or Schedule 1 (Form 1040), Part II 17 Educator expenses ...... 17 18 Certain business expenses of reservists, performing artists, and fee-basis government of cials ...... 18 19 Health savings account deduction ...... 19 20 Moving expenses for members of the armed forces ...... 20 21 Deductible part of self-employment tax ...... 21 1,413 22 Self-employed SEP, SIMPLE, and quali ed plans ...... 22 23 Self-employed health insurance deduction ...... 23 24 Penalty on early withdrawal of savings ...... 24 25 IRA deduction ...... 25 26 Student loan interest deduction ...... 26 27 Tuition and fees deduction. See instructions ...... 27 28 Charitable contributions. See instructions ...... 28 29 Add lines 17 through 28 ...... 29 1,413 30 Adjusted gross income. Subtract line 29 from line 16 ...... 30 18,587 Part III Payments of Income Tax to Guam or the CNMI

31 Payments on estimated tax return led with Guam or the CNMI ...... 31 1,409 32 Income tax withheld from your wages while employed by the U.S. Government as a civilian in Guam or the CNMI ...... 32 33 Income tax withheld from your wages while employed as a member of the U.S. Armed Forces in Guam or the CNMI ...... 33 34 Income tax withheld from your wages earned in Guam or the CNMI other than amounts on lines 31 through 33 ...... 34 35 Total payments. Add lines 31 through 34 ...... 35 1,409 For Paperwork Reduction Act Notice, see the Instructions for Forms 1040 and 1040-SR. Cat. No. 42243X Form 5074 (2020)

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2020 Form 8689, Allocation of Individual Income Tax to the U.S. Virgin Islands

Allocation of Individual Income Tax OMB No. 1545-0074 Form 8689 to the U.S. Virgin Islands 2020 Department of the Treasury Attach to Form 1040 or 1040-SR. Attachment Internal Revenue Service Go to www.irs.gov/Form8689 for the latest information. Sequence No. 869 Name(s) shown on Form 1040 or 1040-SR Your social security number Juan and Carla Moreno 222-00-2222 Part I Income From the U.S. Virgin Islands (USVI) 1 Wages, salaries, tips, etc...... 1 2 Taxable interest ...... 2 500 3 Ordinary dividends ...... 3 4 Taxable refunds, credits, or offsets of local USVI income taxes ...... 4 5 Alimony received ...... 5 6 Business income or (loss) ...... 6 7 Capital gain or (loss) ...... 7 8 Other gains or (losses) ...... 8 9 IRA distributions (taxable amount) ...... 9 10 Pensions and annuities (taxable amount) ...... 10 11 Rental real estate, royalties, partnerships, S corporations, trusts, etc...... 11 6,200 12 Farm income or (loss) ...... 12 13 Unemployment compensation ...... 13 14 Social security bene ts (taxable amount) ...... 14 15 Other income. List type and amount 15 16 Add lines 1 through 15. This is your total USVI income ...... 16 6,700 Part II Adjusted Gross Income From the USVI 17 Educator expenses ...... 17 18 Certain business expenses of reservists, performing artists, and fee-basis government of cials 18 19 Health savings account deduction ...... 19 20 Moving expenses for members of the armed forces ...... 20 21 Deductible part of self-employment tax ...... 21 22 Self-employed SEP, SIMPLE, and quali ed plans ...... 22 23 Self-employed health insurance deduction ...... 23 24 Penalty on early withdrawal of savings ...... 24 25 IRA deduction ...... 25 26 Student loan interest deduction ...... 26 27 Tuition and fees deduction. See instructions ...... 27 28 Charitable contributions. See instructions ...... 28 29 Add lines 17 through 28 ...... 29 30 Subtract line 29 from line 16. This is your USVI adjusted gross income ...... 30 6,700 Part III Allocation of Tax to the USVI 31 Enter amount from Form 1040 or 1040-SR, line 24 ...... 31 4,539 32 Enter total of certain amounts from Form 1040 or 1040-SR. See instructions on page 4 for amount to enter 32 33 Subtract line 32 from line 31 ...... 33 4,539 34 Enter amount from Form 1040 or 1040-SR, line 11 ...... 34 35 Divide line 30 above by line 34. Enter the result as a decimal (rounded to at least 3 places). Do not enter more than 1.000 ...... 35 . 122 36 Multiply line 33 by line 35. This is your tax allocated to the USVI ...... 36 554 Part IV Payments of Income Tax to the USVI 37 Income tax withheld by the USVI ...... 37 38 2020 estimated tax payments and amount applied from 2019 return ... 38 400 39 Amount paid with Form 4868 (extension request) ...... 39 40 Add lines 37 through 39. These are your total payments to the USVI ...... 40 400 41 Enter the smaller of line 36 or line 40. Include this amount in the total on Form 1040 or 1040-SR, line 33. On the dotted line next to line 33, enter “Form 8689” and show this amount ...... 41 400 42 Overpayment to the USVI. If line 40 is more than line 36, subtract line 36 from line 40 . . ... 42 43 Amount of line 42 you want refunded to you ...... 43 44 Amount of line 42 you want applied to your 2021 estimated tax . . . . 44 45 Amount you owe to the USVI. If line 40 is less than line 36, subtract line 40 from line 36 . . ... 45 154 46 Enter the amount from line 45 that you will pay when you le your income tax return. Include this amount in the total of Form 1040 or 1040-SR, line 33. On the dotted line next to line 33, enter “Form 8689” and show this amount ...... 46 154 For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 64603D Form 8689 (2020)

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• MilTax. Members of the U.S. Armed fied public accountants (CPAs), attorneys, and Forces and qualified veterans may use Mil- many others who don’t have professional cre- Tax, a free tax service offered by the De- dentials. If you choose to have someone pre- 6. partment of Defense through Military One- pare your tax return, choose that preparer Source. wisely. A paid tax preparer is: Also, the IRS offers Free Fillable • Primarily responsible for the overall sub- Forms, which can be completed online and stantive accuracy of your return, How To Get Tax then filed electronically regardless of in- • Required to sign the return, and come. • Required to include their preparer tax iden- Help tification number (PTIN). Using online tools to help prepare your re- turn. Go to IRS.gov/Tools for the following. Although the tax preparer always signs the Note. Overseas taxpayers see Taxpayer Assis- return, you're ultimately responsible for provid- tance Outside the United States, later. • The Earned Income Tax Credit Assistant (IRS.gov/EITCAssistant) determines if ing all the information required for the preparer you’re eligible for the earned income credit to accurately prepare your return. Anyone paid (EIC). to prepare tax returns for others should have a Taxpayer Assistance • The Online EIN Application (IRS.gov/EIN) thorough understanding of tax matters. For helps you get an employer identification more information on how to choose a tax pre- If you have questions about a tax issue, need number (EIN). parer, go to Tips for Choosing a Tax Preparer help preparing your tax return, or want to down- • The Tax Withholding Estimator (IRS.gov/ on IRS.gov. load free publications, forms, or instructions, go W4app) makes it easier for everyone to to IRS.gov and find resources that can help you pay the correct amount of tax during the Coronavirus. Go to IRS.gov/Coronavirus for right away. year. The tool is a convenient, online way links to information on the impact of the corona- to check and tailor your withholding. It’s virus, as well as tax relief available for individu- Preparing and filing your tax return. After more user-friendly for taxpayers, including als and families, small and large businesses, receiving all your wage and earnings state- retirees and self-employed individuals. The and tax-exempt organizations. ments (Form W-2, W-2G, 1099-R, 1099-MISC, features include the following. 1099-NEC, etc.); unemployment compensation – Easy to understand language. Tax reform. Tax reform legislation affects indi- statements (by mail or in a digital format) or – The ability to switch between screens, viduals, businesses, and tax-exempt and gov- other government payment statements (Form correct previous entries, and skip ernment entities. Go to IRS.gov/TaxReform for 1099-G); and interest, dividend, and retirement screens that don’t apply. information and updates on how this legislation statements from banks and investment firms – Tips and links to help you determine if affects your taxes. (Forms 1099), you have several options to you qualify for tax credits and deduc- choose from to prepare and file your tax return. Employers can register to use Business tions. You can prepare the tax return yourself, see if Services Online. The Social Security Adminis- – A progress tracker. you qualify for free tax preparation, or hire a tax tration (SSA) offers online service at SSA.gov/ – A self-employment tax feature. professional to prepare your return. employer for fast, free, and secure online W-2 – Automatic calculation of taxable social filing options to CPAs, accountants, enrolled security benefits. Free options for tax preparation. Go to agents, and individuals who process Form W-2, IRS.gov to see your options for preparing and • The First Time Homebuyer Credit Account Wage and Tax Statement, and Form W-2c, filing your return online or in your local commun- Look-up (IRS.gov/HomeBuyer) tool pro- Corrected Wage and Tax Statement. ity, if you qualify, which include the following. vides information on your repayments and • Free File. This program lets you prepare account balance. IRS social media. Go to IRS.gov/SocialMedia and file your federal individual income tax • The Sales Tax Deduction Calculator to see the various social media tools the IRS return for free using brand-name tax-prep- (IRS.gov/SalesTax) figures the amount you uses to share the latest information on tax aration-and-filing software or Free File filla- can claim if you itemize deductions on changes, scam alerts, initiatives, products, and ble forms. However, state tax preparation Schedule A (Form 1040). services. At the IRS, privacy and security are paramount. We use these tools to share public may not be available through Free File. Go Getting answers to your tax ques- information with you. Don’t post your SSN or to IRS.gov/FreeFile to see if you qualify for tions. On IRS.gov, you can get other confidential information on social media free online federal tax preparation, e-filing, up-to-date information on current sites. Always protect your identity when using and direct deposit or payment options. events and changes in tax law. • VITA. The Volunteer Income Tax Assis- any social networking site. tance (VITA) program offers free tax help • IRS.gov/individuals/international- The following IRS YouTube channels pro- to people with low-to-moderate incomes, taxpayers/individuals-living-or-working-in- vide short, informative videos on various tax-re- persons with disabilities, and limited-Eng- us-possessions: Find discussions, rules for lated topics in English, Spanish, and ASL. lish-speaking taxpayers who need help taxpayers living or working in the U.S. terri- • Youtube.com/irsvideos. preparing their own tax returns. Go to tories. • Youtube.com/irsvideosmultilingua. IRS.gov/VITA, download the free IRS2Go • IRS.gov/Help: A variety of tools to help you • Youtube.com/irsvideosASL. app, or call 800-906-9887 for information get answers to some of the most common on free tax return preparation. tax questions. Watching IRS videos. The IRS Video portal • TCE. The Tax Counseling for the Elderly • IRS.gov/ITA: The Interactive Tax Assistant, (IRSVideos.gov) contains video and audio pre- (TCE) program offers free tax help for all a tool that will ask you questions on a num- sentations for individuals, small businesses, taxpayers, particularly those who are 60 ber of tax law topics and provide answers. and tax professionals. years of age and older. TCE volunteers • IRS.gov/Forms: Find forms, instructions, specialize in answering questions about and publications. You will find details on Online tax information in other languages. pensions and retirement-related issues 2020 tax changes and hundreds of interac- You can find information on IRS.gov/ unique to seniors. Go to IRS.gov/TCE, tive links to help you find answers to your MyLanguage if English isn’t your native lan- download the free IRS2Go app, or call questions. guage. 888-227-7669 for information on free tax • You may also be able to access tax law in- return preparation. formation in your electronic filing software. Free interpreter service. Multilingual assis- tance, provided by the IRS, is available at Tax- payer Assistance Centers (TACs) and other Need someone to prepare your tax return? IRS offices. Over-the-phone interpreter service There are various types of tax return preparers, is accessible in more than 350 languages. including tax preparers, enrolled agents, certi-

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Getting tax forms and publications. Go to • The IRS can’t issue refunds before that it can take up to 3 weeks from the date you IRS.gov/Forms to view, download, or print all of mid-February 2021 for returns that claimed filed your amended return for it to show up in the forms, instructions, and publications you the EIC or the additional child tax credit our system, and processing it can take up to 16 may need. You can also download and view (ACTC). This applies to the entire refund, weeks. popular tax publications and instructions (in- not just the portion associated with these cluding the Instructions for Forms 1040 and credits. Understanding an IRS notice or letter 1040-SR) on mobile devices as an eBook at • Download the official IRS2Go app to your you’ve received. Go to IRS.gov/Notices to IRS.gov/eBooks. Or you can go to IRS.gov/ mobile device to check your refund status. find additional information about responding to OrderForms to place an order. • Call the automated refund hotline at an IRS notice or letter. 800-829-1954. Access your online account (individual tax- Contacting your local IRS office. Keep in payers only). Go to IRS.gov/Account to se- Making a tax payment. The IRS uses the lat- mind, many questions can be answered on curely access information about your federal tax est encryption technology to ensure your elec- IRS.gov without visiting an IRS Taxpayer Assis- account. tronic payments are safe and secure. You can tance Center (TAC). Go to IRS.gov/LetUsHelp • View the amount you owe, pay online, or make electronic payments online, by phone, for the topics people ask about most. If you still set up an online payment agreement. and from a mobile device using the IRS2Go need help, IRS TACs provide tax help when a • Access your tax records online. app. Paying electronically is quick, easy, and tax issue can’t be handled online or by phone. • Review your payment history. faster than mailing in a check or money order. All TACs now provide service by appointment, • Go to IRS.gov/SecureAccess to review the Go to IRS.gov/Payments for information on how so you’ll know in advance that you can get the required identity authentication process. to make a payment using any of the following service you need without long wait times. Be- options. fore you visit, go to IRS.gov/TACLocator to find Using direct deposit. The fastest way to re- • IRS Direct Pay: Pay your individual tax bill the nearest TAC and to check hours, available ceive a tax refund is to file electronically and or estimated tax payment directly from services, and appointment options. Or, on the choose direct deposit, which securely and elec- your checking or savings account at no IRS2Go app, under the Stay Connected tab, tronically transfers your refund directly into your cost to you. choose the Contact Us option and click on “Lo- financial account. Direct deposit also avoids the • Debit or Credit Card: Choose an approved cal Offices.” possibility that your check could be lost, stolen, payment processor to pay online, by or returned undeliverable to the IRS. Eight in 10 phone, or by mobile device. The Taxpayer Advocate taxpayers use direct deposit to receive their re- • Electronic Funds Withdrawal: Offered only funds. The IRS issues more than 90% of re- when filing your federal taxes using tax re- Service (TAS) Is Here To funds in less than 21 days. turn preparation software or through a tax Help You professional. What Is TAS? Getting a transcript of your return. The • Electronic Federal Tax Payment System: quickest way to get a copy of your tax transcript Best option for businesses. Enrollment is TAS is an independent organization within the is to go to IRS.gov/Transcripts. Click on either required. IRS that helps taxpayers and protects taxpayer “Get Transcript Online” or “Get Transcript by • Check or Money Order: Mail your payment rights. Their job is to ensure that every taxpayer Mail” to order a free copy of your transcript. If to the address listed on the notice or in- is treated fairly and that you know and under- you prefer, you can order your transcript by call- structions. stand your rights under the Taxpayer Bill of ing 800-908-9946. • Cash: You may be able to pay your taxes Rights. with cash at a participating retail store. Reporting and resolving your tax-related • Same-Day Wire: You may be able to do identity theft issues. same-day wire from your financial institu- How Can You Learn About Your • Tax-related identity theft happens when tion. Contact your financial institution for Taxpayer Rights? someone steals your personal information availability, cost, and cut-off times. to commit tax fraud. Your taxes can be af- The Taxpayer Bill of Rights describes 10 basic fected if your SSN is used to file a fraudu- What if I can’t pay now? Go to IRS.gov/ rights that all taxpayers have when dealing with lent return or to claim a refund or credit. Payments for more information about your op- the IRS. Go to TaxpayerAdvocate.IRS.gov to help you understand what these rights mean to The IRS doesn’t initiate contact with tax- tions. • you and how they apply. These are your rights. payers by email, text messages, telephone • Apply for an online payment agreement Know them. Use them. calls, or social media channels to request (IRS.gov/OPA) to meet your tax obligation personal or financial information. This in- in monthly installments if you can’t pay cludes requests for personal identification your taxes in full today. Once you complete What Can TAS Do For You? numbers (PINs), passwords, or similar in- the online process, you will receive imme- formation for credit cards, banks, or other diate notification of whether your agree- TAS can help you resolve problems that you financial accounts. ment has been approved. can’t resolve with the IRS. And their service is • Go to IRS.gov/IdentityTheft, the IRS Iden- • Use the Offer in Compromise Pre-Qualifier free. If you qualify for their assistance, you will tity Theft Central webpage, for information to see if you can settle your tax debt for be assigned to one advocate who will work with on identity theft and data security protec- less than the full amount you owe. For you throughout the process and will do every- tion for taxpayers, tax professionals, and more information on the Offer in Compro- thing possible to resolve your issue. TAS can businesses. If your SSN has been lost or mise program, go to IRS.gov/OIC. help you if: stolen or you suspect you’re a victim of • Your problem is causing financial difficulty tax-related identity theft, you can learn Filing an amended return. You can now file for you, your family, or your business; what steps you should take. Form 1040-X electronically with tax filing soft- • You face (or your business is facing) an • Get an Identity Protection PIN (IP PIN). IP ware to amend 2019 Forms 1040 and 1040-SR. immediate threat of adverse action; or PINs are six-digit numbers assigned to eli- To do so, you must have e-filed your original • You’ve tried repeatedly to contact the IRS gible taxpayers to help prevent the misuse 2019 return. Amended returns for all prior years but no one has responded, or the IRS of their SSNs on fraudulent federal income must be mailed. See Tips for taxpayers who hasn’t responded by the date promised. tax returns. When you have an IP PIN, it need to file an amended tax return and go to prevents someone else from filing a tax re- IRS.gov/Form1040X for information and up- How Can You Reach TAS? turn with your SSN. To learn more, go to dates. IRS.gov/IPPIN. TAS has offices in every state, the District of Checking the status of your amended re- Columbia, and Puerto Rico. Your local advo- Checking on the status of your refund. turn. Go to IRS.gov/WMAR to track the status cate’s number is in your local directory and at • Go to IRS.gov/Refunds. of Form 1040-X amended returns. Please note

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TaxpayerAdvocate.IRS.gov/Contact-Us. You certain level and need to resolve tax problems For more information, go to IRS.gov/help/ can also call them at 877-777-4778 and in: with the IRS, such as audits, appeals, and tax contact-my-local-office-internationally. • American Samoa, the CNMI, and Guam: collection disputes. In addition, clinics can pro- 808-566-2950 (in Hawaii); vide information about taxpayer rights and re- Taxpayer Advocate Service. If you live out- • Puerto Rico, and USVI: 787-522-8600 for sponsibilities in different languages for individu- side of the United States, you can call the Tax- Spanish, and 787-522-8601 for English (in als who speak English as a second language. payer Advocate at (787) 522-8601 in English or Puerto Rico). Services are offered for free or a small fee for (787) 522-8600 in Spanish. You can contact the eligible taxpayers. To find a clinic near you, visit Taxpayer Advocate Service in person at: How Else Does TAS Help www.TaxpayerAdvocate.IRS.gov/about-us/ Taxpayers? Low-Income-Taxpayer-Clinics-LITC/ or see IRS Internal Revenue Service Pub. 4134, Low Income Taxpayer Clinic List. Taxpayer Advocate Service TAS works to resolve large-scale problems that City View Plaza, 48 Carr 165, affect many taxpayers. If you know of one of Guaynabo, P.R. 00968-8000 these broad issues, please report it to them at Taxpayer Assistance IRS.gov/SAMS. You can call the Taxpayer Advocate toll free Outside the United at 1-877-777-4778. For more information on the TAS for Tax Professionals States Taxpayer Advocate Service and contacts if you are outside of the United States go to IRS.gov/ TAS can provide a variety of information for tax If you are outside the United States, Advocate/Local-Taxpayer-Advocate/Contact- professionals, including tax law updates and you can call 267-941-1000 (Eng- Your-Local-Taxpayer-Advocate. guidance, TAS programs, and ways to let TAS lish-speaking only). This number is not know about systemic problems you’ve seen in toll free. your practice. If you wish to write instead of calling, please address your letter to: Low Income Taxpayer Clinics (LITCs) Internal Revenue Service LITCs are independent from the IRS. LITCs International Accounts represent individuals whose income is below a Philadelphia, PA 19255-0725 U.S.A.

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To help us develop a more useful index, please let us know if you have ideas for index entries. Index See “Comments and Suggestions” in the “Introduction” for the ways you can reach us.

Commonwealth of the Northern Form 4868 22 Effectively connected A Mariana Islands How to get the automatic income 10, 11 Additional child tax credit 15 (Commonwealth of the extension 22 Grants 10 Additional Medicare Tax 3, 12, Northern Mariana Islands): Individuals outside the United Investments 9 13, 16, 18, 20, 24 Form 5074 15 States and Puerto Rico 22 Labor or personal services 8, 9 Aliens: Compensation for labor or Married taxpayers 22 Pensions 9 Nonresident (See specific personal services 8, 9 Married taxpayers, how to get Sales or other dispositions of territory) Alternative basis 9 the extension 22 property 9, 10 Resident (See specific territory) Multi-year compensation 9 When to file 22 Scholarships and fellowships 10 American Samoa 11–13 Time basis 8, 9 When you file your return 22 Services performed partly within Form 4563 11 Competent Authority a territory 8, 9 Armed forces, U.S.: Assistance 25 Source of 7 (See also specific territory) How to make your request 25 F U.S. Armed Forces 8 Armed Forces, U.S.: Protective Claim 25 Filing requirements 18 U.S. income rule 8 Bona fide residence 3 Credits: American Samoa 11–13 Income from American Samoa or Earned income credit 22 Earned income 22 Form 4563 11 Puerto Rico excluded. 22 Source of income 8 Foreign tax 24 CNMI 17 Deductions if income from Spouse 4, 8, 14, 16, 18, 20 Commonwealth of the Northern American Samoa or Puerto Assistance (See Tax help) Mariana Islands 15 Rico excluded 23 Awards and prizes 10 D Form 5074 15 Interest income 9 Days of presence in a territory: E-file-options, U.S. return 21 Inventory: Presence test: Guam 17, 18 Sales or other dispositions of 9 B Territory, days in 4 Form 5074 17 Investment income 9 Bankruptcy cases, Days of presence in the United Puerto Rico 13–15 IRA deduction 23 Chapter 11 24 States: Territories 11, 20 Itemized deductions 23 Bona fide residence 3–7 Charitable sports event 5 U.S. Virgin Islands: Closer connection 6, 7 Full-time student. 5 Form 1040INFO 19 Year of move 6, 7 Qualifying medical treatment 4 Form 4868 20 M Presence test 4 School 5 Form 8689 19 Medical treatment, qualifying 5 Child, defined 4 Student 5 Foreign tax credit 24 Moving expense deduction: Nonresident aliens 4 Days of presence in the United Form: (See also specific territory) Qualifying medical States.: 1040-ES 25 U.S. return 23 treatment 5 Presence test: 1040INFO 19 Territory, days in 4 U.S., days in 4 1040-NR 12, 14, 15, 17, 19 U.S., days in 4 Days of Presence in the United 1040-PR 15 N Reporting change in residency States or Relevant Territory 4 1040-SS 12, 15, 16, 18, 20 Net Investment Income Tax 3, status 7 Deductions: 1116 24 12, 13, 24 Penalty for not reporting 7 IRA contribution 23 3903 23 Nonresident alien (See specific Tax home 6 Moving expenses: 4563 11 territory) Exceptions 6 (See also specific territory) 4563, illustrated example 25–27 Northern Mariana Islands 15–17 government officials 6 U.S. return 23 4868 20 Seafarers 6 Self-employment tax, one-half 5074 15, 17 Students 6 of 23 5074, illustrated example 26, 28 P Year of move 6, 7 Standard deduction 23 8689 19 Paying your taxes 25 Tests to meet 3 Deductions if Territory Income Is 8689, illustrated example 26, 29 Penalty: U.S. Armed Forces 3 Excluded 23 8898 7 Failure to report change in Year of move 7 Dispositions of certain property, Schedule A (Form 1040 or residency status 7 Puerto Rico 7 special rules for 9 1040-SR) 23 Pension income 9 Dividends 9 Schedule SE (Form 1040 or Permanent home 5 Double taxation, inconsistent tax 1040-SR) 24 Personal property: C treatment: Form 8938,Statement of Sales or other dispositions of 9 Change in residency status, Mutual agreement procedure 25 Specified Foreign Financial Personal service income 8, 9 reporting 7 Assets, 2 Presence test 4 Penalty for not reporting 7 Fringe benefits 9 Child, defined 4 Change of address 2 E Nonresident aliens 4 Form 8822 2 Earned income credit 22 Qualifying medical treatment 5 Child, defined 4 Effectively connected G Significant connection: Child tax credit, additional 15 income 10, 11 government employees, Permanent home 5 Closer connection 6, 7 Estimated tax payments 12, 14, U.S. (See specific territory) Territory, days in 4 Year of move 6, 7 16, 18, 20, 25 Grants 10 U.S., days in 4 CNMI 17 Extension of time to file: Guam 17, 18 Prizes 10 CNMI tax return 16 U.S. Virgin Islands 20 Form 5074 17 Publications (See Tax help) Comments and suggestions 3 Extension of time to file U.S. Puerto Rico 13–15 Commonwealth of Puerto return 22 Additional child tax credit 15 Rico 13–15 Automatic 6-Month I Bona fide residence: Commonwealth of the Northern Extension 22 Income: Year of move 7 Mariana Islands 15 Extension beyond 2 months 22 Awards and prizes 10 Extension beyond 6 months 22

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Grants 10 Investment income 9 U.S. Virgin Islands 18–20 Q Investment income 9 Labor or personal services 8, 9 Form 1040INFO 19 Qualifying medical treatment 5 Labor or personal services 8, 9 Pensions 9 Form 4868 20 Pensions 9 Sales or other dispositions of Form 8689 19 Sales or other dispositions of property 9, 10 R property 9, 10 Scholarships and fellowships 10 Real property: Scholarships and fellowships 10 Services performed partly within V Sales or other dispositions of 9 Services performed partly within a territory 8, 9 Virgin Islands, U.S. 18–20 Reminders 1 a territory 8, 9 U.S. Armed Forces 8 Additional Medicare Tax. 2 U.S. Armed Forces 8 U.S. income rule 8 Earned income credit (EIC) 2 U.S. income rule 8 W Electronic filing 2 Special rules for What's New: Expired ITIN. 2 filing (See specific territory) U Increase in and modification of Individual taxpayer identification Special rules for gains from U.S. Armed Forces: the additional child tax credit numbers (ITINs) for aliens. 2 dispositions of certain (See also specific territory) (ACTC) 2 Net Investment Income Tax. 2 property 9 Bona fide residence 3 Maximum income subject to Self-employment tax. 2 Standard deduction 23 Earned income credit 22 social security tax 1 Rental income 9 Source of income 8 Optional methods to figure net Report a change of bona fide Spouse 4, 8, 14, 16, 18, 20 earnings 1 residence 2 T U.S. government Standard deduction amount Resident alien (See specific Tables: employees (See specific increased 1 territory) U.S. filing requirements for most territory) When to file: Royalty income 9 taxpayers (Table 4-1) 21 U.S. income rule 8 (See also specific territory) U.S. source of income U.S. return, territory income U.S. return 21 (Table 2-1) 8 excluded on 22–24 Where To File: S Tax help 30 Credits: (See also specific territory) Scholarships and fellowships 10 Tax home 6 Earned income credit 22 U.S. return 22 Self-employment tax: Exceptions 6 Foreign tax credit 24 Which return to file (See specific (See also specific territory) government officials 6 Deductions: territory) U.S. return 24 Seafarers 6 IRA contribution 23 Who must file: Self-employment tax Students 6 Itemized deductions 23 (See also specific territory) deduction 23 Year of move 6, 7 Moving expenses 23 U.S. return 21 Services performed partly within Taxpayer Advocate Service 2 Self-employment tax, a territory 8, 9 Territories, list of 3 one-half of 23 Significant Connection 5 Territory source income 7–11 Standard deduction 23 Source of income 7–11 Awards and prizes 10 U.S. return with excluded Awards and prizes 10 Effectively connected income 23 Effectively connected income 10, 11 U.S. taxation of territory income, income 10, 11 Grants 10 to get information on 3

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