New rules for U.S. possessions. The American Jobs Creation Act of 2004 changed the bona fide residence and income source rules for individuals with income from U.S. possessions. Regulations will be issued that clarify the following rules. However, they were not final at the time this publication went to print. When additional guidance is issued, it will be made available on the IRS website at www.irs.gov.

Bona fide residence. Except as provided in regulations, you are a bona fide resident of a U.S. possession if, during the entire tax year, you:

For tax years beginning after October 22, 2004 (except as provided in regulations), you must be present in the possession for at least 183 days during the tax year. If you are a calendar year taxpayer, this rule applies to your tax returns for 2005 and later years. See Qualifications under Possession Exclusion.

Reporting a change in residence. For tax years ending after October 22, 2004, and for the three preceding tax years, you must report any change to your bona fide residence in a U.S. possession. A future IRS Notice will explain the time and manner of how to report the change in residence. (This Notice was not available at the time this publication went to print.) If you do not report the change in residence, you may be charged a $1,000 penalty.

Possession source income. Except as provided in regulations, income earned after October 22, 2004, is not U.S. possession source income if it is treated as income:

See What Income Can Be Excluded under Possession Exclusion.

Third party designee. You can check the “Yes” box in the “Third Party Designee” area of your return to authorize the IRS to discuss your return with a friend, family member, or any other person you choose. This allows the IRS to call the person you identified as your designee to answer any questions that may arise during the processing of your return. It also allows your designee to perform certain actions. See your income tax package for details.

IRS individual taxpayer identification numbers (ITINs) for aliens. If you are a nonresident or resident alien and you do not have and are not eligible to get a social security number (SSN), you must apply for an ITIN. For details on how to do so, see Form W-7, Application for IRS Individual Taxpayer Identification Number, and its instructions. It usually takes 4–6 weeks to get an ITIN. If you already have an ITIN, enter it wherever your SSN is requested on your tax return.

Earned income credit (EIC). Generally, if you are a resident of a U.S. possession, you cannot claim the EIC on your U.S. tax return. To claim the EIC, your home (and your spouse's if filing a joint return) must have been in the United States for more than half the year. If you have a child, the child must have lived with you in the United States for more than half the year. For this purpose, United States includes only the 50 states and the District of Columbia. Special rules apply to military personnel stationed outside the United States. For more information on the credit, see Publication 596, Earned Income Credit (EIC).

Change of address. If you change your mailing address, be sure to notify the Internal Revenue Service using Form 8822, Change of Address. Mail it to the Internal Revenue Service Center for your old address (addresses for the Service Centers are on the back of the form).

Photographs of missing children. The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.

This publication discusses how to treat income received in U.S. possessions on your U.S. tax return.

It also discusses whether you are required to file a return with the possession. American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, the Virgin Islands, and Puerto Rico have their own independent tax departments. If you have income from one of these possessions, you may have to file a U.S. tax return only, a possession tax return only, or both returns. This generally depends on whether you are a bona fide resident of one of the possessions. In some cases, you may have to file a U.S. return, but be able to exclude income earned in a possession from U.S. tax.

If you need additional information on your tax obligations in a U.S. possession, write to the tax department of that possession. Their addresses are provided under the individual headings for each possession.