What is IRS Publication 570: Tax Guide For Individuals With Income From U.S. Possessions
The IRS Publication 570: Tax Guide For Individuals with Income From U.S. Possessions is a document published by the Internal Revenue Service (IRS) that provides information for tax filers with investments in U.S.-guided territories and possessions.
BREAKING DOWN IRS Publication 570: Tax Guide For Individuals With Income From U.S. Possessions
IRS Publication 570 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 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 (CNMI), Guam and the U.S. Virgin Islands.
The IRS Publication 570: Tax Guide For Individuals with Income From U.S. Possessions is necessary for those looking to understand how to treat the income they receive on U.S. possessions for the purposes of their own personal tax returns. Tax filers looking to receive tax benefits afforded to residents of a U.S. possession must prove that they are a bona fide resident of that possession during 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.
How To File The IRS Publication 570: Tax Guide For Individuals with Income From U.S. Possessions
Taxpayers or tax return preparers can fill out Form 570 by accessing the document, along with accompanying information and legislative updates through the IRS website. In order to file Form 570, a taxpayer must have a Social Security number or for non-residents or resident aliens, an updated individual taxpayer identification number or ITIN. If you have not used an ITIN in the past three consecutive years, you will need to file for a new number, as they expire if not used on a federal tax return for three consecutive years.
The IRS also notes in its filing instructions for Form 570 that there may be additional taxes due outside of filing the form, 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.