The IRS reminds any residents of Puerto Rico, the U.S. Virgin Islands and American Samoa affected by last year’s hurricanes and tropical storms who are required to file a 2017 federal income tax return or pay their 2017 tax, to be sure to do so by June 29. This special extended deadline is available regardless of whether a taxpayer’s residence changed during 2017. No interest, late-filing penalty or late-payment penalty will be due.
Further, bona fide residents of Puerto Rico, the U.S. Virgin Islands and American Samoa, who permanently relocated to the U.S. mainland due to last year’s hurricanes and tropical storms may need to file Form 8898, Statement for Individuals Who Begin or End Bona Fide Residence in a U.S. Possession, with the Internal Revenue Service along with their Form 1040 or Form 1040NR. Due to the disaster-related extensions granted by the IRS to residents of these three U.S. territories, Form 8898 will generally be due by Friday, June 29, 2018. In addition, anyone who files for an income-tax-filing extension will also have until Oct. 15, 2018, to file Form 8898.
This requirement to file Form 8898 applies to anyone who had total gross income exceeding $75,000 for the year, ceased to be, or became, a bona fide resident of a U.S. territory during 2017 and met other requirements. Also referred to as U.S. possessions, U.S. territories include Guam and the Commonwealth of the Northern Mariana Islands, along with Puerto Rico, the U.S. Virgin Islands and American Samoa. Bona fide resident status matters because special tax rules may apply to anyone who is a bona fide resident of a U.S. territory, compared to a resident of any of the 50 states or the District of Columbia. See Publication 570, Tax Guide for Individuals with Income from U.S. Possessions, for details.
For a married couple, the requirement to file Form 8898 with the IRS applies to each spouse separately. Likewise, the $75,000 income threshold applies to each spouse separately. A $1,000 penalty may apply if a person who is required to file Form 8898 fails to file or files an incorrect or incomplete Form 8898.
Generally, a taxpayer is a bona fide resident of a U.S. territory if they:
- Meet the presence test — spent at least 183 days in the territory;
- Don’t have a tax home outside the U.S territory, and
- Don’t have a closer connection to the United States or to a foreign country than to the U.S. territory.
Generally, this means that a person who lives and works in a U.S. territory and spends most of their time there is considered a bona fide resident of that territory. Special residency rules apply for active duty military members of the U.S. Armed Forces and their civilian spouses.
Puerto Ricans and U.S. Virgin Islanders who temporarily left due to Hurricane Irma or Hurricane Maria but have already returned to the territory, or plan to do so, will generally not need to file Form 8898. That’s because under special relief, none of the time between Sept. 6, 2017, and May 31, 2018, counts as time away from the territory. See Notice 2018-19, and Publication 570, for more information.
The IRS provided federal income tax return filing and penalty relief to anyone whose mailing address is in Puerto Rico, the U.S. Virgin Islands or American Samoa. Eligible hurricane and tropical storm victims with a mailing address elsewhere, can also obtain this relief by calling the IRS disaster hotline at 866-562-5227. See the IRS disaster relief page for more information.
- Residents of U.S. Possessions – Form 8898 Bona Fide Residence
- Publication 570, Tax Guide for Individuals with Income from U.S. Possessions
- Form 8898, Statement for Individuals Who Begin or End Bona Fide Residence in a U.S. Possession
- Publication 976, Disaster Relief