IRS Form 8898 – If you are a U.S. citizen or resident alien moving to or from Puerto Rico, Guam, the U.S. Virgin Islands, American Samoa, or the Northern Mariana Islands, you may need to file IRS Form 8898. This form notifies the IRS of your change in bona fide residence status for tax purposes under Internal Revenue Code Section 937(c).
Failing to file when required can result in a $1,000 penalty and may affect your ability to claim territory-specific tax benefits, such as exclusions for territory-source income or incentives under programs like Puerto Rico’s Act 60. This comprehensive guide, based on the latest IRS Form 8898 (Rev. October 2024) and its instructions, explains everything you need to know.
What Is IRS Form 8898?
Form 8898, officially titled Statement for Individuals Who Begin or End Bona Fide Residence in a U.S. Territory, is a standalone information return. You do not attach it to your Form 1040 or 1040-NR.
It tells the IRS you are taking the position that you:
- Became a bona fide resident of a U.S. territory, or
- Ceased to be a bona fide resident of a U.S. territory.
Download the current form here: IRS Form 8898 PDF.
Instructions: Available on IRS.gov/Form8898.
Who Must File IRS Form 8898?
You must file if both of these conditions are met in the tax year of the change:
- Your worldwide gross income for the year exceeds $75,000.
- You are claiming (for U.S. tax purposes) that you became or ceased to be a bona fide resident of a U.S. territory.
Important notes on the $75,000 threshold:
- Applies to each spouse separately (do not include your spouse’s income).
- Worldwide gross income includes all income from any source (wages, business, investments, etc.) before deductions.
- If both spouses must file, each files a separate Form 8898.
You are not required to file if your worldwide gross income is $75,000 or less, even if your residency status changes.
U.S. Territories Covered by Form 8898
- American Samoa
- Guam
- Commonwealth of the Northern Mariana Islands (CNMI)
- Commonwealth of Puerto Rico
- U.S. Virgin Islands
What Qualifies as Bona Fide Residence in a U.S. Territory?
You are a bona fide resident of a U.S. territory for the entire tax year only if you meet all three tests (with limited exceptions in the year of the move):
- Presence Test — You must satisfy one of these:
- At least 183 days in the territory during the tax year, or
- At least 549 days in the territory over the current year + prior 2 years (minimum 60 days each year), or
- No more than 90 days in the United States, or
- More days in the territory than in the U.S. and $3,000 or less of earned income from U.S. sources, or
- No significant connection to the United States (no permanent home, voter registration, or spouse/minor child living in the U.S.).
Special day-counting rules apply for medical treatment, disasters, travel, students, and charitable athletes. See the full instructions for details.
- Tax Home Test — Your tax home (main place of business or regular abode) must be in the territory. No tax home outside the territory at any time during the year.
- Closer Connection Test — You must have a closer connection to the territory than to the United States or any foreign country, based on factors such as:
- Location of your permanent home
- Where your family lives
- Banking, driver’s license, voting, charitable contributions, etc.
Year-of-Move Exceptions — Special relaxed rules apply in the year you move to or from a territory. These are detailed in the Form 8898 instructions and Publication 570.
Armed Forces and Military Spouses: Special rules apply under the Military Spouses Residency Relief Act (MSRRA). Consult Publication 570 or a tax professional.
Full rules are in Chapter 1 of Publication 570, Tax Guide for Individuals With Income From U.S. Possessions.
When and Where to File Form 8898?
- Deadline: By the due date of your Form 1040 or 1040-NR (including extensions) for the year of the change.
- Do not attach it to your tax return.
- Mail to: Internal Revenue Service
3651 S. IH 35
MS 4301 AUSC
Austin, TX 78741
A mobile-friendly online version is available on IRS.gov for easier completion.
Penalty for Not Filing or Filing Incorrectly
$1,000 per failure (incomplete, incorrect, or late), unless you show reasonable cause. This is in addition to any criminal penalties for false statements.
How to Complete IRS Form 8898 (Step-by-Step)?
Part I – General Information
- Line 1: Check “became” or “ceased” and enter the tax year + territory.
- Line 2: U.S. citizen or resident alien? (Yes/No)
- Line 3: Worldwide gross income for the year and 3-year average.
Part II – Presence in the United States or U.S. Territory
- Line 4: Date you moved to or from the territory.
- Lines 5–6: Days present in the U.S. and territory (use detailed counting rules).
- Line 7: Significant connection to the U.S.?
- Line 8: Earned income from U.S. sources (and whether over $3,000).
Part III – Closer Connection
- Lines 9–17: Tax home, closer connection, permanent homes, family location, vehicles, belongings, homestead exemption, etc.
Part IV – Source of Income (if applicable)
- Details on income and gains from property.
Sign and date the form. Keep a copy for your records.
Tax Implications of Bona Fide Residence
Bona fide residents of these territories generally:
- File tax returns only with the territory (not the IRS) for territory-source income.
- May exclude U.S.-source income from territory taxation (or vice versa) under specific sourcing rules.
Moving to Puerto Rico is especially popular for Act 60 (formerly Acts 20/22) incentives. Filing Form 8898 is a key compliance step to establish your bona fide residency and protect those benefits.
Common Scenarios Requiring Form 8898
- U.S. mainland resident moves to Puerto Rico and claims bona fide residency.
- Puerto Rico resident moves back to the 50 states.
- High-income individual relocating to Guam or the U.S. Virgin Islands.
- Military families under MSRRA rules.
Frequently Asked Questions (FAQs)
Do I file Form 8898 every year?
No — only in the tax year you begin or end bona fide residence.
Can I e-file Form 8898?
No — it must be mailed.
What if my income is exactly $75,000?
You are not required to file.
Where can I find the official instructions?
IRS Instructions for Form 8898 (Rev. October 2024) and Publication 570.
Final Advice
IRS Form 8898 is a critical compliance document for anyone changing residency to or from a U.S. territory with worldwide gross income over $75,000. The rules for bona fide residence are complex, especially the presence, tax home, and closer connection tests.
This is not tax or legal advice. Tax situations involving U.S. territories are highly fact-specific. Consult a qualified tax professional familiar with IRC Section 937 and Publication 570 before filing.
For the most current information, always check IRS.gov/Form8898.
Related Resources:
Stay compliant and protect your tax benefits when moving to or from a U.S. territory. File Form 8898 on time if required!