Publication 570 (2007), Tax Guide for Individuals With Income From U.S. Possessions

3. Filing Information for Individuals in Certain U.S. Possessions

Table of Contents

If you have income from American Samoa, the CNMI, Guam, Puerto Rico, or the USVI, you may have to file a tax return with the tax department of that possession. Or, you may have to file two annual tax returns, one with the possession's tax department and the other with the U.S. Internal Revenue Service. This chapter covers the general rules for filing returns in the five possessions.

You must first determine if you are a bona fide resident of the relevant possession. See chapter 1 for a discussion of the requirements you must meet.

You should ask for forms and advice about the filing of possession tax returns from that possession's tax department, not the Internal Revenue Service. Contact information is listed in this chapter under the heading for each possession.

American Samoa

American Samoa has its own separate and independent tax system. Although its tax laws are modeled on the U.S. Internal Revenue Code, there are certain differences.

Where To Get Forms and Information

Requests for advice about matters connected with Samoan taxation should be sent to:

Tax Division
Government of American Samoa
Pago Pago, American Samoa 96799

The phone number is 684-633-4181. The fax number is 684-633-1513.

You can access the Samoan website at www.americansamoa.gov/taxforms/tax.htm.

Caution. The addresses and phone numbers listed above are subject to change.

Which Returns To File

Your residency status and your source of income with regard to American Samoa determine whether you file your return and pay your tax to American Samoa, to the United States, or to both.

In addition to the information below that is categorized by residency status, the Special Rules section (later) contains important information for determining the correct forms to file.

Bona Fide Resident of American Samoa

Bona fide residents of American Samoa are generally exempt from U.S. tax on their American Samoa source income.

U.S. citizen or resident alien. If you are a U.S. citizen or resident alien and a bona fide resident of American Samoa during the entire tax year, you generally must file the following returns.

An American Samoa tax return reporting your gross income from worldwide sources. If you report non-American Samoa source income on your American Samoa tax return, you can claim a credit against your American Samoa tax liability for income taxes paid on that income to the United States, a foreign country, or another possession.
A U.S. tax return reporting income from worldwide sources, but excluding income from sources within American Samoa. However, amounts received for services performed as an employee of the United States or any of its agencies cannot be excluded (see U.S. Government employees, on this page).

To exclude American Samoa source income, attach a completed Form 4563 to your U.S. tax return (see Form 4563 below for more information). If you are excluding American Samoa source income on your U.S. tax return, you will not be allowed any deductions from gross income or credits against tax that are directly or indirectly allocable to the exempt income. For more information, see Special Rules for Completing Your U.S. Tax Return in chapter 4.

Nonresident alien. If you are a bona fide resident of American Samoa during the entire tax year, but a nonresident alien of the United States, you generally must file the following returns.

An American Samoa tax return reporting worldwide income.
A U.S. tax return (Form 1040) reporting income from worldwide sources, but excluding American Samoa source income other than amounts for services performed as an employee of the United States or any of its agencies. For more information, see U.S. Government employees, on this page. To exclude income from sources within American Samoa, attach a completed Form 4563 to your U.S. tax return (see Form 4563, below, for more information).

For all other tax purposes, however, you will be treated as a nonresident alien individual. For example, you are not allowed the standard deduction, you cannot file a joint return, and you are not allowed a deduction for a dependent unless that person is a citizen or national of the United States. There are also limitations on what deductions and credits are allowed. See Publication 519 for more information.

Form 4563. If you must file a U.S. income tax return and you qualify to exclude any of your income from American Samoa, claim the exclusion by completing Form 4563 and attaching it to your Form 1040. Form 4563 cannot be filed by itself. There is an example of a filled-in Form 4563 in chapter 5.

Where to file. If you are a bona fide resident of American Samoa during the entire tax year, send your U.S. tax return and all attachments to:

Department of the Treasury
Internal Revenue Service Center
Austin, TX 73301-0215

Send your American Samoa tax return and all attachments to the address given under Where To Get Forms and Information, earlier.

Not a Bona Fide Resident of American Samoa

An individual who is not a bona fide resident of American Samoa for the tax year generally files both U.S. and American Samoa tax returns, and claims a foreign tax credit on the U.S. return for taxes paid to American Samoa.

U.S. citizen or resident alien. If you are a U.S. citizen or resident alien but not a bona fide resident of American Samoa during the entire tax year, you generally must file the following returns.

An American Samoa tax return reporting only your income from sources within American Samoa.
A U.S. tax return reporting your income from worldwide sources. You can take a credit against your U.S. tax liability if you paid income taxes to American Samoa (or other possession or foreign country) and reported income from those sources on your U.S. tax return.

Nonresident alien. If you are a nonresident alien of the United States who does not qualify as a bona fide resident of American Samoa for the entire tax year, you generally must file the following returns.

An American Samoa tax return reporting only your income from sources within American Samoa. In this situation, wages for services performed in American Samoa for the U.S. Government or for private employers is income from sources within American Samoa.
A U.S. tax return (Form 1040NR) reporting U.S. source income according to the rules for a nonresident alien. See the instructions for Form 1040NR, U.S. Nonresident Alien Income Tax Return.

Where to file. If you are not a bona fide resident of American Samoa during the entire tax year, send your U.S. tax return and all attachments to:

Department of the Treasury
Internal Revenue Service Center
Austin, TX 73301-0215

Send your American Samoa tax return and all attachments to the address given under Where To Get Forms and Information, earlier.

Special Rules

Some special rules apply to certain types of income and employment connected with American Samoa.

U.S. Armed Forces. Bona fide residents of American Samoa include military personnel whose official home of record is American Samoa.

U.S. Government employees. If you are employed in American Samoa by either the U.S. Government or any of its agencies, or by the Government of American Samoa, you are subject to tax by American Samoa on your pay from either government. Whether you are subject to tax by American Samoa on your non-American Samoa source income depends on your status in American Samoa as a bona fide resident.

Wages and salaries paid to U.S. citizens by the Governments of the United States and American Samoa are also subject to U.S. federal income tax. These payments do not qualify for the exclusion of income from sources within American Samoa, discussed earlier.

If you report government wages on both your U.S. and American Samoa tax returns, you can take a credit on your U.S. tax return for income taxes paid or accrued to American Samoa. Figure the credit on Form 1116, and attach that form to your U.S. tax return, Form 1040. Show your wages paid for services performed in American Samoa on Form 1116, line 1a, and enter “American Samoa” on line g.

Moving expense deduction. Generally, expenses of a move to American Samoa are directly attributable to American Samoa wages, salaries, and other earned income. Likewise, the expenses of a move back to the United States are generally attributable to U.S. earned income.

If your move was to American Samoa, report your deduction for moving expenses as follows.

If you are a bona fide resident in the tax year of your move, enter your deductible expenses on your American Samoa tax return.
If you are not a bona fide resident, enter your deductible expenses on both your American Samoa and U.S. tax returns. Also, for purposes of a tax credit against your U.S. tax liability, reduce your American Samoa “general category income” on Form 1116, line 1a, by entering the deductible moving expenses on line 2.

If your move was to the United States, complete Form 3903, Moving Expenses, and enter the deductible amount on Form 1040, line 26.

Self-employment tax. If you are not required to file a U.S. tax return but have income that is effectively connected with a trade or business in American Samoa, you must file Form 1040-SS with the United States. On this form you will report your self-employment income to the United States and, if necessary, pay self-employment tax on that income.

Double Taxation

A mutual agreement procedure exists to settle cases of double taxation between the United States and American Samoa. See Double Taxation in chapter 4.

The Commonwealth of Puerto Rico

The Commonwealth of Puerto Rico has its own separate and independent tax system. Although it is modeled after the U.S. system, there are differences in law and tax rates.

Where To Get Forms and Information

Requests for information about the filing of Puerto Rican tax returns should be addressed to:

Departamento de Hacienda
Negociado de Asistencia
Contributiva y Consultas Especializadas
P.O. Box 9024140
San Juan, Puerto Rico 00902-4140

The phone number is 787-721-2020, extension 3611.

To obtain Puerto Rican tax forms, contact the Forms and Publications Division Office at the above address or call 787-721-2020, extensions 2645 or 2646.

You can access the Puerto Rican website at www.hacienda.gobierno.pr or email your questions about Puerto Rican taxes to InfoServ@hacienda.gobierno.pr.

Caution. The addresses and phone numbers listed above are subject to change.

Which Returns To File

Generally, you will file returns with both Puerto Rico and the United States. The income reported on each return depends on your residency status in Puerto Rico. To determine if you are a bona fide resident of Puerto Rico, see the information in chapter 1.

Bona Fide Resident of Puerto Rico

Bona fide residents of Puerto Rico will generally pay tax to Puerto Rico on their worldwide income.

U.S. citizen or resident alien. If you are a U.S. citizen or resident alien and also a bona fide resident of Puerto Rico during the entire tax year, you generally must file the following returns.

A Puerto Rican tax return reporting income from worldwide sources. If you report U.S. source income on your Puerto Rican tax return, you can claim a credit against your Puerto Rican tax, up to the amount allowable, for income taxes paid to the United States.
A U.S. tax return reporting income from worldwide sources, but excluding Puerto Rican source income. However, see U.S. Government employees, later, for an exception.

If you are excluding Puerto Rican income on your U.S. tax return, you will not be allowed any deductions or credits that are directly or indirectly allocable to exempt income. For more information, see Special Rules for Completing Your U.S. Tax Return in chapter 4.

If all of your income is from Puerto Rican sources, you are not required to file a U.S. tax return. However, if you have self-employment income, see Self-employment tax, later.

U.S. citizen only. If you are a U.S. citizen, you may also qualify under these rules if you have been a bona fide resident of Puerto Rico for at least 2 years before moving from Puerto Rico. In this case, you can exclude your income derived from sources within Puerto Rico that you earned before the date you changed your residence. For more information, see Puerto Rico under Special Rules in the Year of a Move in chapter 1.

Nonresident alien. If you are a bona fide resident of Puerto Rico during the entire tax year, but a nonresident alien of the United States, you generally must file the following returns.

A Puerto Rican tax return reporting income from worldwide sources. If you report U.S. source income on your Puerto Rican tax return, you can claim a credit against your Puerto Rican tax, up to the amount allowable, for income taxes paid to the United States.
A U.S. tax return (Form 1040) reporting income from worldwide sources, but excluding Puerto Rican source income (other than amounts for services performed as an employee of the United States or any of its agencies). For tax purposes other than reporting income, however, you will be treated as a nonresident alien individual. For example, you are not allowed the standard deduction, you cannot file a joint return, and you are not allowed a deduction for a dependent unless that person is a citizen or national of the United States. There are also limitations on what deductions and credits are allowed. See Publication 519 for more information.

Where to file. If you are a bona fide resident of Puerto Rico during the entire tax year, send your U.S. tax return and all attachments to:

Department of the Treasury
Internal Revenue Service Center
Austin, TX 73301-0215

Send your Puerto Rican tax return and all attachments if you request a refund to:

Department of the Treasury
P.O. Box 50072
San Juan, PR 00902-6272

Send all other Puerto Rican tax returns, with all attachments, to:

Department of the Treasury
P.O. Box 9022501
San Juan, PR 00902-2501

Not a Bona Fide Resident of Puerto Rico

An individual who is not a bona fide resident of Puerto Rico for the tax year generally files tax returns with both Puerto Rico and the United States.

U.S. citizen or resident alien. If you are a U.S. citizen or resident alien but not a bona fide resident of Puerto Rico during the entire tax year, you generally must file the following returns.

A Puerto Rican tax return reporting only your income from Puerto Rican sources. Wages for services performed in Puerto Rico for the U.S. Government or for private employers is income from Puerto Rican sources.
A U.S. tax return reporting income from worldwide sources. Generally, you can claim a foreign tax credit for income taxes paid to Puerto Rico on the Puerto Rican income that is not exempt from U.S. taxes (see chapter 4 for more information).

Nonresident alien. If you are a nonresident alien of the United States who does not qualify as a bona fide resident of Puerto Rico for the entire tax year, you generally must file the following returns.

A Puerto Rican tax return reporting only your income from Puerto Rican sources. Wages for services performed in Puerto Rico for the U.S. Government or for private employers is income from Puerto Rican sources.
A U.S. tax return (Form 1040NR) according to the rules for a nonresident alien. See the instructions for Form 1040NR.

Where to file. If you are not a bona fide resident of Puerto Rico during the entire tax year, send your U.S. tax return and all attachments to:

Department of the Treasury
Internal Revenue Service Center
Austin, TX 73301-0215

Send your Puerto Rican tax return and all attachments if you request a refund to:

Department of the Treasury
P.O. Box 50072
San Juan, PR 00902-6272

Send all other Puerto Rican tax returns, with all attachments, to:

Department of the Treasury
P.O. Box 9022501
San Juan, PR 00902-2501

Special Rules

In addition to the above general rules for filing U.S. and Puerto Rican tax returns, there are some special rules that apply to certain individuals and types of income.

U.S. Government employees. Wages and cost-of-living allowances paid by the U.S. Government (or one of its agencies) for working in Puerto Rico are subject to Puerto Rican tax. However, the cost-of-living allowances are excluded from Puerto Rican gross income up to the amount exempt from U.S. tax. In order to claim this exclusion, you must:

Include with your Puerto Rican tax return evidence to show the amount received during the year, and
Be in full compliance with your Puerto Rican tax responsibilities.

These wages are also subject to U.S. tax, but the cost-of-living allowances are excludable. A foreign tax credit is available in order to avoid double taxation.

Income from sources outside Puerto Rico and the United States. If you are a U.S. citizen and bona fide resident of Puerto Rico and you have income from sources outside both Puerto Rico and the United States, that income is treated as foreign source income under both tax systems. In addition to your Puerto Rican and U.S. tax returns, you may also have to file a return with the country or possession from which your outside income was derived. To avoid double taxation, a foreign tax credit is generally available for either the U.S. or Puerto Rican return.

Example.

Thomas Red is a bona fide resident of Puerto Rico and a U.S. citizen. He traveled to the Dominican Republic and worked in the construction industry for 1 month. His wages were $20,000. Because the wages were earned outside Puerto Rico and outside the United States, Thomas must file a tax return with Puerto Rico and the United States. He may also have to file a tax return with the Dominican Republic.

Moving expense deduction. Generally, expenses of a move to Puerto Rico are directly attributable to wages, salaries, and other earned income from Puerto Rico. Likewise, the expenses of a move back to the United States are generally attributable to U.S. earned income.

If your move was to Puerto Rico, report your deduction for moving expenses as follows.

If you are a bona fide resident in the tax year of your move, enter your deductible expenses on your Puerto Rican tax return.
If you are not a bona fide resident, enter your deductible expenses on both your Puerto Rican and U.S. tax returns. Also, for purposes of a tax credit against your U.S. tax liability, reduce your Puerto Rican “general category income” on Form 1116, line 1a, by entering the deductible moving expenses on line 2.

If your move was to the United States, complete Form 3903 and enter the deductible amount on Form 1040, line 26.

Additional child tax credit. If you are not required to file a U.S. income tax return, this credit is available only if you meet all three of the following conditions.

You were a bona fide resident of Puerto Rico during the entire tax year.
Social security and Medicare taxes were withheld from your wages or you paid self-employment tax.
You had three or more qualifying children. (For the definition of a qualifying child, see the instructions for Form 1040-PR or Form 1040-SS.)

If your income exceeds certain levels, you may be disqualified from receiving this credit. Use Form 1040-PR or Form 1040-SS to claim the additional child tax credit.

Advice about possible tax benefits under the Puerto Rican investment incentive programs is available from the Puerto Rican tax authorities.

Self-employment tax. If you have no U.S. filing requirement but have income that is effectively connected with a trade or business in Puerto Rico, you must file Form 1040-SS or Form 1040-PR with the United States to report your self-employment income and, if necessary, pay self-employment tax.

Double Taxation

A mutual agreement procedure exists to settle cases of double taxation between the United States and the Commonwealth of Puerto Rico. See Double Taxation in chapter 4.

The Commonwealth of the Northern Mariana Islands

The Commonwealth of the Northern Mariana Islands (CNMI) has its own tax system based partly on the same tax laws and tax rates that apply to the United States and partly on local taxes imposed by the CNMI government.

Where To Get Forms and Information

Requests for advice about CNMI residency and tax matters should be addressed to:

Department of Revenue and Taxation
Commonwealth of the Northern
Mariana Islands
P.O. Box 5234, CHRB
Saipan, MP 96950

The phone number is 670-664-1000. The fax number is 670-664-1015.

You can access the CNMI website at www.dof.gov.mp.

Caution. The addresses and phone numbers listed above are subject to change.

Which Return To File

In general, all individuals with income from the CNMI will file only one return, either to the CNMI or to the United States. Your residency status with regard to the CNMI determines which return you will file. Be sure to check the Special Rules section, later, for additional information about filing your tax return.

Bona Fide Resident of the CNMI

If you are a U.S. citizen, resident alien, or nonresident alien and a bona fide resident of the CNMI during the entire tax year, file your income tax return with the CNMI.

Include income from worldwide sources on your CNMI return. In determining your total tax payments, include all income tax withheld by either the CNMI or the United States, any credit for an overpayment of income tax to either the CNMI or the United States, and any payments of estimated tax to either the CNMI or the United States. Pay any balance of tax due with your tax return.
Generally, if you properly file your return with, and fully pay your income tax to, the CNMI, then you are not liable for filing an income tax return with, or for paying tax to, the United States for the tax year. However, if you were self-employed in 2007, see Self-employment tax, later.

Example.

David Gold was a bona fide resident of the CNMI for 2007. He received wages of $30,000 paid by a private employer in the CNMI and dividends of $4,000 from U.S. corporations that carry on business mainly in the United States. He must file a 2007 income tax return with the CNMI Department of Revenue and Taxation. He reports his total income of $34,000 on the CNMI return.

Where to file. If you are a bona fide resident of the CNMI for the entire tax year, send your return to the Department of Revenue and Taxation at the address given earlier.

U.S. Citizen or Resident Alien (Other Than a Bona Fide Resident of the CNMI)

If you have income from sources within the CNMI and are a U.S. citizen or resident alien, but you are not a bona fide resident of the CNMI during the entire tax year, file your income tax return with the United States.

Include income from worldwide sources on your U.S. return. In determining your total tax payments, include all income tax withheld by 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 tax to either the United States or the CNMI. Pay any balance of tax due with your tax return.
You are not liable for filing an income tax return with, or for paying tax to, the CNMI for the tax year.

You may also need to complete Form 5074.

Form 5074. If you file a U.S. income tax return, attach a completed Form 5074 if you (and your spouse if filing a joint return) have:

Adjusted gross income of $50,000 or more for the tax year, and
Gross income of $5,000 or more from sources within the CNMI.

The information on this form is used by the United States and the CNMI to divide the net income taxes collected on these individuals.

There is an example of a filled-in Form 5074 in chapter 5.

Where to file. If you are a citizen or resident alien of the United States but not a bona fide resident of the CNMI during the entire tax year, send your return to:

Department of the Treasury
Internal Revenue Service
Austin, TX 73301-0215

Citizen of the CNMI

If you are a citizen of the CNMI (meaning that you were born or naturalized in the CNMI) but not otherwise a U.S. citizen or a U.S. resident alien during the tax year, file your income tax return with the CNMI. Include income from worldwide sources on your CNMI return. Take into account tax withheld by both jurisdictions in determining if there is tax due or an overpayment. Pay any balance of tax due with your tax return.

Where to file. If you are a citizen of the CNMI, send your return to the Department of Revenue and Taxation at the address given earlier.

Special Rules

Special rules apply to certain types of income, employment, and filing status.

Joint return. If you file a joint return, you should file your return (and pay the tax) with the jurisdiction where the spouse who has the greater adjusted gross income would have to file if you were filing separately. If the spouse with the greater adjusted gross income is a bona fide resident of the CNMI during the entire tax year, file the joint return with the CNMI. If the spouse with the greater adjusted gross income is a U.S. citizen or resident alien but not a bona fide resident of the CNMI during the entire tax year, file your joint return with the United States. For this purpose, income is determined without regard to community property laws.

Example.

Marsha Blue, a U.S. citizen, was a resident of the United States, and her husband, a citizen of the CNMI, was a bona fide resident of the CNMI during the entire tax year. Marsha earned $65,000 as a computer programmer in the United States. Her husband earned $20,000 as an artist in the CNMI. Mr. and Mrs. Blue will file a joint return. Because Marsha has the greater adjusted gross income, the Blues must file their return with the United States and report the entire $85,000 on that return.

U.S. Armed Forces. If you are a member of the U.S. Armed Forces who qualified as a bona fide resident of the CNMI in a prior tax year, your absence from the CNMI solely in compliance with military orders will not change your bona fide residency. If you did not qualify as a bona fide resident of the CNMI in a prior tax year, your presence in the CNMI solely in compliance with military orders will not qualify you as a bona fide resident of the CNMI.

Moving expense deduction. Generally, expenses of a move to the CNMI are directly attributable to wages, salaries, and other earned income from the CNMI. Likewise, the expenses of a move back to the United States are generally attributable to U.S. earned income.

If your move was to the CNMI, report your deduction for moving expenses as follows.

If you are a bona fide resident in the tax year of your move, enter your deductible expenses on your CNMI tax return.
If you are not a bona fide resident, enter your deductible expenses on Form 3903 and enter the deductible amount on Form 1040, line 26, and on Form 5074, line 20.

If your move was to the United States, complete Form 3903 and enter the deductible amount on Form 1040, line 26.

Self-employment tax. If you have no U.S. filing requirement, but have income that is effectively connected with a trade or business in the CNMI, you must file Form 1040-SS with the United States to report your self-employment income and, if necessary, pay self-employment tax.

Payment of estimated tax. If you must pay estimated tax, make your payment to the jurisdiction where you would file your income tax return if your tax year were to end on the date your estimated tax payment is first due. Generally, you should make the rest of your quarterly payments of estimated tax to the jurisdiction where you made your first payment of estimated tax. However, estimated tax payments to either jurisdiction will be treated as payments to the jurisdiction with which you file the tax return.

If you make a joint payment of estimated tax, make your payment to the jurisdiction where the spouse who has the greater estimated adjusted gross income would have to pay (if a separate payment were made). For this purpose, income is determined without regard to community property laws.

Early payment. If you make your first payment of estimated tax early, follow the rules above to determine where to send it. If you send it to the wrong jurisdiction, make all later payments to the jurisdiction to which the first payment should have been sent.

Double Taxation

A mutual agreement procedure exists to settle cases of double taxation between the United States and the CNMI. See Double Taxation in chapter 4.

Guam

Guam has its own tax system based on the same tax laws and tax rates that apply in the United States.

Where To Get Forms and Information

Requests for advice about Guam residency and tax matters should be addressed to:

Department of Revenue and Taxation
Government of Guam
P.O. Box 23607
GMF, GU 96921

The phone number is 671-475-1840 or 671-475-1842. The fax number is 671-472-2643.

You can access the Guam Department of Revenue and Taxation website at www.guamtax.com.

Caution. The addresses and phone numbers listed above are subject to change.

Which Return To File

Bona fide residents of Guam are subject to special U.S. tax rules. In general, all individuals with income from Guam will file only one return—either to Guam or the United States.

Bona Fide Resident of Guam

If you are a bona fide resident of Guam during the entire tax year, file your return with Guam. This applies to all bona fide residents who are citizens, resident aliens, or nonresident aliens of the United States.

Include income from worldwide sources on your Guam return. In determining your total tax payments, you will include all income tax withheld by either Guam or the United States, any credit for an overpayment of income tax to either Guam or the United States, and any payments of estimated tax to either Guam or the United States. Pay any balance of tax due with your tax return.
Generally, if you properly file your return with, and fully pay your income tax to, Guam, then you are not liable for filing an income tax return with, or for paying tax to, the United States. However, if you were self-employed in 2007, see Self-employment tax, later.

Example.

Gary Barker was a bona fide resident of Guam for 2007. He received wages of $25,000 paid by a private employer in Guam and dividends of $2,000 from U.S. corporations that carry on business mainly in the United States. He must file a 2007 income tax return with the Government of Guam. He reports his total income of $27,000 on the Guam return.

Where to file. If you are a bona fide resident of Guam for the entire tax year, file your return with the Department of Revenue and Taxation at the address given earlier.

U.S. Citizen or Resident Alien (Other Than a Bona Fide Resident of Guam)

If you have income from sources within Guam and are a U.S. citizen or resident alien, but you are not a bona fide resident of Guam during the entire tax year, file your income tax return with the United States.

Include income from worldwide sources on your U.S. return. In determining your total tax payments, include all income tax withheld by either the United States or Guam, any credit for an overpayment of income tax to either the United States or Guam, and any payments of estimated tax to either the United States or Guam. Pay any balance of tax due with your tax return.
You are not liable for filing an income tax return with, or for paying tax to, Guam for the tax year.

You may also need to complete Form 5074.

Form 5074. If you file a U.S. income tax return, attach a completed Form 5074 if you (and your spouse if filing a joint return) have:

Adjusted gross income of $50,000 or more for the tax year, and
Gross income of $5,000 or more from sources within Guam.

The information on this form is used by the United States and Guam to divide the net income taxes collected on these individuals.

There is an example of a filled-in Form 5074 in chapter 5.

Where to file. If you are a citizen or resident alien of the United States but not a bona fide resident of Guam during the entire tax year, send your return to:

Department of the Treasury
Internal Revenue Service
Austin, TX 73301-0215

Citizen of Guam

If you are a citizen of Guam (meaning that you were born or naturalized in Guam) but not otherwise a U.S. citizen or U.S. resident alien during the tax year, file your income tax return with Guam. Include income from worldwide sources on your Guam return. Take into account tax withheld by both jurisdictions in determining if there is tax due or an overpayment. Pay any balance of tax due with your tax return.

Where to file. If you are a citizen of Guam, send your return to the Department of Revenue and Taxation at the address given earlier.

Special Rules

Special rules apply to certain types of income, employment, and filing status.

Joint return. If you file a joint return, you should file your return (and pay the tax) with the jurisdiction where the spouse who has the greater adjusted gross income would have to file if you were filing separately. If the spouse with the greater adjusted gross income is a bona fide resident of Guam during the entire tax year, file the joint return with Guam. If the spouse with the greater adjusted gross income is a U.S. citizen or resident alien but not a bona fide resident of Guam during the entire tax year, file the joint return with the United States. For this purpose, income is determined without regard to community property laws.

Example.

Bill Whiting, a U.S. citizen, was a resident of the United States, and his wife, a citizen of Guam, was a bona fide resident of Guam during the entire tax year. Bill earned $45,000 as an engineer in the United States. His wife earned $15,000 as a teacher in Guam. Mr. and Mrs. Whiting will file a joint return. Because Bill has the greater adjusted gross income, the Whitings must file their return with the United States and report the entire $60,000 on that return.

U.S. Armed Forces. If you are a member of the U.S. Armed Forces who qualified as a bona fide resident of Guam in a prior tax year, your absence from Guam solely in compliance with military orders will not change your bona fide residency. If you did not qualify as a bona fide resident of Guam in a prior tax year, your presence in Guam solely in compliance with military orders will not qualify you as a bona fide resident of Guam.

Moving expense deduction. Generally, expenses of a move to Guam are directly attributable to wages, salaries, and other earned income from Guam. Likewise, the expenses of a move back to the United States are generally attributable to U.S. earned income.

If your move was to Guam, report your deduction for moving expenses as follows.

If you are a bona fide resident in the tax year of your move, enter your deductible expenses on your Guam tax return.
If you are not a bona fide resident, enter your deductible expenses on Form 3903 and enter the deductible amount on Form 1040, line 26, and on Form 5074, line 20.

If your move was to the United States, complete Form 3903 and enter the deductible amount on Form 1040, line 26.

Self-employment tax. If you have no U.S. filing requirement, but have income that is effectively connected with a trade or business in Guam, you must file Form 1040-SS with the United States to report your self-employment income and, if necessary, pay self-employment tax.

Double Taxation

A mutual agreement procedure exists to settle cases of double taxation between the United States and Guam. See Double Taxation in chapter 4.

The U.S. Virgin Islands

An important factor in USVI taxation is whether, during the entire tax year, you are a bona fide resident of the USVI.

Where To Get Forms and Information

For information about filing your U.S. Virgin Islands tax return or about Form 1040INFO, contact:

Virgin Islands Bureau of Internal Revenue
9601 Estate Thomas
Charlotte Amalie
St. Thomas, VI 00802

The phone number is 340-774-5865. The fax numbers are 340-714-9341 and 340-714-9345.

You can access the USVI website at www.viirb.com.

Caution. The addresses and phone numbers listed above are subject to change.

Which Return To File

In general, bona fide residents of the USVI pay taxes only to the USVI. U.S. citizens or resident aliens (but not bona fide residents of the USVI) with USVI source income pay a portion of the tax to each jurisdiction.

Bona Fide Resident of the USVI

File your tax return with the USVI if you are a U.S. citizen, resident alien, or nonresident alien and a bona fide resident of the USVI during the entire tax year.

Include your worldwide income on your USVI return. In determining your total tax payments, take into account all income tax withheld by either the USVI or the United States, any credit for an overpayment of income tax to either the USVI or the United States, and any payments of estimated tax to either the USVI or the United States. Pay any balance of tax due with your tax return.
You generally do not have to file with the United States for any tax year in which you are a bona fide resident of the USVI during the entire tax year, provided you report and pay tax on your income from all sources to the USVI and identify the source(s) of the income on the return. However, if you have self-employment income, you may be required to file Form 1040-SS with the United States. For more information, see Self-employment tax under Special Rules, later.

Form 1040INFO. If you are a bona fide resident of the USVI and have non-USVI source income, you must also file Virgin Islands Form 1040INFO, Non-Virgin Islands Source Income of Virgin Islands Residents, with the Virgin Islands Bureau of Internal Revenue. You can get Form 1040INFO by contacting the address given earlier.

Where to file. If you are a bona fide resident of the USVI for the entire tax year, file your return with the Virgin Islands Bureau of Internal Revenue at the address given under Where To Get Forms and Information, earlier.

U.S. Citizen or Resident Alien (Other Than a Bona Fide Resident of the USVI)

If you are a U.S. citizen or resident alien but not a bona fide resident of the USVI during the entire tax year, you must file identical tax returns with the United States and the USVI if you have:

Income from sources in the USVI, or
Income effectively connected with the conduct of a trade or business in the USVI.

File the original return with the United States and file a copy of the U.S. return (including all attachments, forms, and schedules) with the Virgin Islands Bureau of Internal Revenue by the due date for filing Form 1040. Use Form 8689 to figure the amount of tax you must pay to the USVI.

Form 8689. Complete this form and attach it to both the return you file with the United States and the copy you file with the USVI. Figure the amount of tax you must pay to the USVI as follows:

Total tax on
U.S. return
(after certain adjustments)

USVI AGI
Worldwide AGI

Pay any tax due to the USVI when you file your return with the Virgin Islands Bureau of Internal Revenue. To receive credit for taxes paid to the USVI, include the amounts from Form 8689, lines 40 and 44, in the total on Form 1040, line 72. On the dotted line next to line 72, enter “Form 8689” and show the amounts.

See the illustrated example in chapter 5.

Where to file. If you are not a bona fide resident of the USVI during the entire tax year, but you have USVI source income, file Form 1040 and all attachments with the:

Department of the Treasury
Internal Revenue Service Center
Austin, TX 73301-0215

File the copy with the Virgin Islands Bureau of Internal Revenue at the address given under Where To Get Forms and Information, earlier.

Special Rules

There are some special rules for certain types of income, employment, and filing status.

Joint return. If you file a joint return, you should file your return (and pay the tax) with the jurisdiction where the spouse who has the greater adjusted gross income would have to file if you were filing separately. If the spouse with the greater adjusted gross income is a bona fide resident of the USVI during the entire tax year, file the joint return with the USVI. If the spouse with the greater adjusted gross income is a U.S. citizen or resident alien of the United States but not a bona fide resident of the USVI during the entire tax year, file the joint return with the United States. For this purpose, income is determined without regard to community property laws.

Example.

Marge Birch, a U.S. citizen, was a resident of the United States, and her husband, a citizen of the USVI, was a bona fide resident of the USVI during the entire tax year. Marge earned $55,000 as an architect in the United States. Her husband earned $30,000 as a librarian in the USVI. Mr. and Mrs. Birch will file a joint return. Because Marge has the greater adjusted gross income, the Birches must file their return with the United States and report the entire $85,000 on that return.

Moving expense deduction. Generally, expenses of a move to the USVI are directly attributable to wages, salaries, and other earned income from the USVI. Likewise, the expenses of a move back to the United States are generally attributable to U.S. earned income.

If your move was to the USVI, report your deduction for moving expenses as follows.

If you are a bona fide resident in the tax year of your move, enter your deductible expenses on your USVI tax return.
If you are not a bona fide resident, enter your deductible expenses on Form 3903 and enter the deductible amount on Form 1040, line 26, and on Form 8689, line 20.

If your move was to the United States, complete Form 3903 and enter the deductible amount on Form 1040, line 26.

Self-employment tax. If you have no U.S. filing requirement, but have income that is effectively connected with a trade or business in the USVI, you must file Form 1040-SS with the United States to report your self-employment income and, if necessary, pay self-employment tax.

Extensions of time to file. You can get an automatic 6-month extension of time to file your tax return. See Extensions of Time To File in chapter 4. Bona fide residents of the USVI during the entire tax year must file a paper Form 4868 with the Virgin Islands Bureau of Internal Revenue. Nonresidents of the USVI should file separate extension requests with the IRS and the Virgin Islands Bureau of Internal Revenue and make any payments due to the respective jurisdictions. However, the Virgin Islands Bureau of Internal Revenue will honor an extension request that is timely filed with the IRS.

Double Taxation

A mutual agreement procedure exists to settle cases of double taxation between the United States and the U.S. Virgin Islands. See Double Taxation in chapter 4.

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