What Is IRS Publication 570: Tax Guide For Individuals With Income From U.S. Possessions?

The term IRS Publication 570: Tax Guide For Individuals With Income From U.S. Possessions refers to a document published by the Internal Revenue Service (IRS) that provides information for tax filers with investments in U.S.-guided territories, including Puerto Rico and Northern Mariana Islands, and possessions. Topics covered in the publication include bona fide residence, how to determine the source of income, as well as examples.

Key Takeaways

  • IRS Publication 570: Tax Guide For Individuals With Income From U.S. Possessions is a document published by the IRS that provides information for tax filers with investments in U.S.-guided territories and possessions.
  • Thesen territories and possessions include Puerto Rico, American Samoa, the Commonwealth of the Northern Mariana Islands, Guam, the U.S. Virgin Islands.
  • Topics covered in the publication include bona fide residence, how to determine the source of income, as well as examples.
  • The guide outlines information about different types of income earned in U.S. territories and possessions.

Understanding IRS Publication 570: Tax Guide For Individuals With Income From U.S. Possessions

The IRS releases a series of publications that are available to individual and corporate taxpayers. These publications act as guides, which provide information and clarification for filers who may have trouble or questions about whether they qualify for certain tax credits and deductions, how to claim certain income, and new tax programs announced during a specific tax year.

IRS Publication 570: Tax Guide For Individuals With Income From U.S. Possessions outlines the requirements for being considered a resident of a U.S. possession and the rules for determining the source of income. Bona fide residents of a territory or possession may be required to fill out a U.S. tax return, a possession tax return, or both. United States possessions include:

  • Puerto Rico
  • American Samoa
  • the Commonwealth of the Northern Mariana Islands
  • Guam
  • the U.S. Virgin Islands

The publication is necessary for those who want to understand how to treat the income they receive from U.S. possessions for the purposes of their own personal tax returns. Tax filers who want to receive tax benefits afforded to residents of a U.S. possession must prove that they are bona fide residents of that possession for the entire tax year. This can be accomplished by not having a home outside of the possession, by having more of a connection to the possession than to the United States or a foreign country, or by meeting the presence test.

Aside from the physical presence test and the tax home of the filer, the publication also outlines how to determine the source of income. The guide has a table outlining which factors determine the source of various types of income, including salaries, pensions, rents, dividends, interest, and proceeds from the sale or property, business inventory, and natural resources.

Taxpayers can also find information about special deductions, credits, and other tax programs that are available to them in Publication 570, including disaster relief and extensions.

Special Considerations

Taxpayers or tax return preparers can access Publication 570 along with accompanying information and legislative updates through the IRS website. Filers must have a Social Security number (SSN) or, for non-residents or resident aliens, an updated individual taxpayer identification number (ITIN). Filers who have not used their ITIN in the past three consecutive years need to file for a new number, as they expire if not used on a federal tax return during this period of time.

The IRS also notes that there may be additional taxes due, such as Medicare, self-employment, and net investment income tax.  For instance, residents of a U.S. territory who are self-employed and earn an income through self-employment are generally required to pay self-employment tax ​​​​​​​to the United States.