IRS Publication 570 – If you’re an individual earning income from U.S. territories like Puerto Rico, Guam, or American Samoa, navigating tax obligations can feel complex. IRS Publication 570 serves as a crucial resource, outlining how to handle territory-sourced income on your U.S. and local tax returns. This SEO-optimized article breaks down the key elements of Publication 570 for tax year 2024, helping you understand filing requirements, residency rules, and more. Whether you’re a bona fide resident or have mixed income sources, this guide will clarify your tax responsibilities.
What Is IRS Publication 570?
IRS Publication 570, titled “Tax Guide for Individuals With Income From U.S. Territories,” is an official IRS document designed to assist taxpayers with income from specific U.S. territories. It explains how to determine if income is sourced from a territory, whether you need to file returns with the IRS, the territory’s tax authority, or both, and ways to avoid double taxation. The publication covers exclusions, credits, and special rules to ensure compliance while minimizing your tax burden.
Updated annually, the 2024 edition includes details on filing deadlines, standard deductions, and self-employment taxes. You can download the PDF directly from the IRS website for free. This guide is essential for U.S. citizens, resident aliens, and nonresident aliens with territory connections.
Who Should Use IRS Publication 570?
This publication is tailored for:
- Bona Fide Residents of U.S. Territories: Individuals living in American Samoa, the Commonwealth of the Northern Mariana Islands (CNMI), Guam, Puerto Rico, or the U.S. Virgin Islands (USVI) who meet residency tests.
- Individuals with Territory-Sourced Income: Even if you’re not a resident, if you earn wages, investments, or self-employment income from these areas.
- U.S. Military Personnel and Spouses: Special rules apply for active duty members and civilian spouses under the Military Spouses Residency Relief Act (MSRRA).
- U.S. Government Employees: Those working in territories but paid by the federal government.
- Nonresident Aliens: With income connected to U.S. territories.
If your worldwide gross income exceeds certain thresholds or you change residency status, you may need to file additional forms like Form 8898. Always consult this guide if you’re unsure about dual filing obligations.
Key U.S. Territories Covered in Publication 570
Publication 570 focuses on five main U.S. territories, each with unique tax systems mirroring parts of the U.S. tax code:
| Territory | Key Tax Authority | Notable Features |
|---|---|---|
| American Samoa | American Samoa Tax Office | Bona fide residents file locally on worldwide income; exclude territory income from U.S. returns using Form 4563. |
| CNMI | Division of Revenue and Taxation | Residents file locally; non-residents may attach Form 5074 to U.S. returns if income thresholds met. |
| Guam | Department of Revenue and Taxation | Similar to CNMI; self-employment tax applies via Form 1040-SS if no U.S. filing needed. |
| Puerto Rico | Departamento de Hacienda | Residents can exclude Puerto Rico-sourced income from U.S. taxes; additional child tax credit available with one or more qualifying children. |
| USVI | Bureau of Internal Revenue | Residents file locally; non-residents use Form 8689 for tax allocation on U.S. returns. |
These territories have their own tax departments—contact them for local forms and advice, as IRS Publication 570 emphasizes.
How to Determine Bona Fide Residency?
A core concept in Publication 570 is “bona fide residency,” which affects how your income is taxed. To qualify, you must satisfy three tests:
- Presence Test: Spend at least 183 days in the territory during the tax year (exceptions for U.S. citizens/residents include the 549-day rule over three years or limited U.S. presence).
- Tax Home Test: Your main place of business or employment must be in the territory.
- Closer Connection Test: Your personal, family, and economic ties must be stronger to the territory than to the U.S. or a foreign country.
Special considerations apply during the year of a move, for nonresident aliens (using a substantial presence test), and for days spent on qualifying medical treatment or disasters. U.S. Armed Forces members retain their residency if absent due to orders. If your status changes and income exceeds $75,000, file Form 8898 to avoid a $1,000 penalty.
Rules for Sourcing Income from U.S. Territories
Income sourcing determines where it’s taxable. Key rules include:
- Personal Services: Sourced where performed (e.g., wages earned in Puerto Rico are Puerto Rico-sourced).
- Investments: Interest and dividends based on payer’s residence; rents/royalties on property location.
- Sales and Gains: Real property by location; personal property by seller’s tax home (special election for gains during territory residency).
- Pensions and Annuities: Allocated based on service location and trust situs.
De minimis exceptions apply for small amounts (up to $3,000 and 90 days). Military pay is sourced to your legal residence. Use these rules to allocate income and claim exclusions on your returns.
Filing Requirements and Due Dates
Filing varies by residency and territory:
- Bona Fide Residents: Often file only with the territory on worldwide income (e.g., no U.S. return for CNMI, Guam, USVI residents if taxes fully paid locally).
- Non-Residents: File U.S. returns (Form 1040, 1040-SR, or 1040-NR) and possibly territory returns; attach allocation forms like 5074 or 8689.
- Self-Employment: Use Form 1040-SS for taxes if no full U.S. return required.
For tax year 2024, returns are due April 15, 2025. Extensions are available via Form 4868 (automatic 6 months). Estimated taxes (Form 1040-ES) are required if you owe $1,000 or more after withholdings. Pay electronically at IRS.gov/Payments.
What’s New in the 2024 Edition of Publication 570?
The 2024 update includes:
- Standard deduction increases for all filing statuses.
- Social Security tax maximum: $168,600 (rising to $176,100 in 2025).
- Additional Child Tax Credit expanded for Puerto Rico residents (now available with one qualifying child).
- Digital assets reporting required on Form 1040-SS.
- Expired COVID-19 credits removed.
- Disaster relief updates, including automatic 60-day extensions for affected areas.
Check IRS.gov/Pub570 for post-publication developments.
Special Rules, Credits, and Exclusions
- Military and Spouses: MSRRA allows spouses to retain prior residency; military pay sourced to domicile.
- Additional Medicare Tax (0.9%) and Net Investment Income Tax (3.8%): Apply if thresholds exceeded on non-territory income.
- Foreign Tax Credit: Use Form 1116 to offset territory taxes paid.
- Exclusions: Bona fide residents can exclude territory-sourced income from U.S. gross income (e.g., via Form 4563 for American Samoa).
- Moving Expenses: Deductible only for active duty military on permanent change of station.
Illustrated examples in the publication show scenarios like income allocation for partial-year residents.
How to Get Tax Help and Resources?
For assistance:
- Visit IRS.gov for forms, calculators, and online filing.
- Contact territory tax offices (addresses in Publication 570).
- Use the Taxpayer Assistance Service (TAS) for disputes.
- Apply for an ITIN if needed via Form W-7.
Download the full PDF or view the HTML version for detailed examples and charts.
Conclusion: Stay Compliant with IRS Publication 570
Understanding IRS Publication 570 is key to properly reporting income from U.S. territories and avoiding penalties. By determining your residency, sourcing income correctly, and filing on time, you can navigate these rules efficiently. For personalized advice, consult a tax professional. Remember, this guide is based on the 2024 edition—always verify the latest at IRS.gov for any updates.