General Instructions

Table of Contents

What's New

New filing address.   Form 8898 should be filed at the new address provided for the Internal Revenue Service Center in Philadelphia, PA. See When and Where To File, later.

Military Spouses Residency Relief Act.   Under the Military Spouses Residency Relief Act (MSRRA), the civilian spouse who accompanies an active duty member of the U.S. Armed Forces (servicemember) to a new military duty station in one of 50 states, the District of Columbia, or a U.S. possession may choose to keep his or her prior residence or domicile for tax purposes. See Special rule for civilian spouse of active duty member of the U.S. Armed Forces, later.

Future developments.   The IRS has created a page on IRS.gov for more information about Form 8898, at www.irs.gov/form8898. Information about any future developments affecting Form 8898 (such as legislation enacted after we release it) will be posted on that page.

Purpose of Form

Use Form 8898 to notify the IRS that you became or ceased to be a bona fide resident of a U.S. possession in accordance with section 937(c). See Bona Fide Residence, later. For this purpose, the following are considered U.S. possessions: American Samoa, Guam, the Commonwealth of the Northern Mariana Islands (CNMI), the Commonwealth of Puerto Rico, and the U.S. Virgin Islands.

Who Must File

You must file Form 8898 for the tax year in which you meet both of the following conditions:

  1. Your worldwide gross income (defined later) in that tax year is more than $75,000, and

  2. You meet one of the following:

    1. You take a position for U.S. tax purposes that you became a bona fide resident of a U.S. possession after a tax year for which you filed a U.S. income tax return as a citizen or resident of the United States but not as a bona fide resident of the possession.

    2. You are a citizen or resident of the United States who takes the position for U.S. tax purposes that you ceased to be a bona fide resident of a U.S. possession after a tax year for which you filed an income tax return (with the IRS, the possession tax authorities, or both) as a bona fide resident of the possession.

    3. You take the position for U.S. tax purposes that you became a bona fide resident of Puerto Rico or American Samoa after a tax year for which you were required to file an income tax return as a bona fide resident of the U.S. Virgin Islands, Guam, or the CNMI.

When figuring whether your worldwide gross income is more than $75,000, do not include any of your spouse's income. If both you and your spouse are required to file Form 8898, file a separate Form 8898 for each of you.

Worldwide gross income.   Worldwide gross income means all income you received in the form of money, goods, property, and services, including any income from sources outside the United States (even if you may exclude part or all of it) and before any deductions, credits, or rebates.

Example.

You moved to the CNMI in December 2010 but did not become a bona fide resident of that possession until the 2011 tax year. You must file Form 8898 for the 2011 tax year if your worldwide gross income for that year is more than $75,000.

When and Where To File

File Form 8898 by the due date (including extensions) for filing Form 1040 or Form 1040NR. File the form by itself at the following address: 

Department of the Treasury 
Internal Revenue Service Center 
Philadelphia, PA 19255-0549

 

Penalty for Not Filing Form 8898

If you are required to file Form 8898 for any tax year, and you fail to file it or do not include all the information required by the form or the form includes incorrect information, you may be subject to a penalty of $1,000, unless it is shown that such failure is due to reasonable cause and not willful neglect. This is in addition to any criminal penalty that may be imposed.

Bona Fide Residence

You are a bona fide resident of a U.S. possession if you:

  • Do not have a tax home outside the possession,

  • Do not have a closer connection to the United States or to a foreign country than to the possession, and

  • Meet the presence test (defined later).

Special rule for members of the U.S. Armed Forces.   If you are a member of the U.S. Armed Forces who qualified as a bona fide resident of the possession in an earlier tax year, your absence from that possession during the current tax year in compliance with military orders will not affect your status as a bona fide resident. Likewise, being in a possession solely in compliance with military orders will not qualify you as a bona fide resident of that possession.

Special rule for civilian spouse of active duty member of the U.S. Armed Forces.   If you are the civilian spouse of an active duty servicemember, under MSRRA you can choose to keep your prior residence or domicile for tax purposes (tax residence) when accompanying the servicemember spouse, who is relocating under military orders, to a new military duty station in one of the 50 states, the District of Columbia, or a U.S. possession. You and your spouse must have the same tax residence. If you choose to keep your prior tax residence after such a relocation, the source of income for services performed (for example, wages or self-employment) by you is considered to be (the jurisdiction of) the prior tax residence. As a result, the amount of income tax withholding (from Form(s) W-2, Wage and Tax Statement) that you are able to claim on your federal return, as well as the need to file a state or U.S. possession return, may be affected. For more information, consult with state, local, or U.S. possession tax authorities regarding your tax obligations under MSRRA.

Exception for the Year of the Move

An exception applies to the tax home and the closer connection tests for the tax year you moved to or from the possession. Under this exception, you satisfy the tax home and the closer connection tests for the tax year of the move if you meet the requirements explained next.

Also, a special exception applies to the bona fide residence test for the tax year you moved from Puerto Rico. Under this exception, you satisfy the bona fide residence test for the tax year you moved from Puerto Rico if you meet the requirements discussed later under Year of the move from Puerto Rico.

Year of the move to the possession.   You satisfy the tax home and closer connection tests for the tax year you moved to the possession if you meet all of the following.

  • You were not a bona fide resident of the possession in any of the 3 tax years immediately preceding the tax year of the move.

  • You did not have a tax home outside the possession during any part of the final 183 days of the tax year of the move.

  • You are a bona fide resident of the possession for the 3 tax years immediately following the tax year of the move.

  If you do not meet all of the above conditions, you do not meet the tax home and closer connection tests under this exception. Instead, you must meet the requirements explained later under Tax Home Test and Closer Connection Test.

Year of the move from the possession.   You satisfy the tax home and closer connection tests for the tax year you moved from American Samoa, the CNMI, Guam, or the U.S. Virgin Islands if you meet all of the following.

  • You were a bona fide resident of the possession for the 3 tax years immediately preceding the tax year of the move.

  • You did not have a tax home outside the possession during any part of the first 183 days of the tax year of the move.

  • You are not a bona fide resident of the possession in any of the 3 tax years immediately following the tax year of the move.

  If you do not meet all of the above conditions, you do not meet the tax home and closer connection tests under this exception. Instead, you must meet the requirements explained later under Tax Home Test and Closer Connection Test.

Year of the move from Puerto Rico.

You qualify as a bona fide resident of Puerto Rico for the part of the tax year before the date you moved from Puerto Rico if you meet all of the following requirements.

  1. You are a U.S. citizen.

  2. You were a bona fide resident of Puerto Rico for at least 2 tax years immediately before the tax year of the move.

  3. In the year of the move, you:

    1. Ceased to be a bona fide resident of Puerto Rico, and

    2. Ceased to have a tax home in Puerto Rico.

  4. You had a closer connection to Puerto Rico than to the United States or a foreign country during the part of the tax year before the date on which you ceased to have a tax home in Puerto Rico.

If you do not meet all of the above requirements, you are not a bona fide resident of Puerto Rico in the year of the move under this exception. Instead, you must meet the requirements explained next under Tax Home Test, Closer Connection Test, and Presence Test.

Tax Home Test

Under the tax home test, you generally cannot have a tax home outside the possession during any part of the tax year. Your tax home is your regular or main place of business, employment, or post of duty regardless of where you maintain your family home. If you do not have a regular or main place of business because of the nature of your work or because you are not engaged in a trade or business, then your tax home is the place where you regularly live. If you do not fit either of these categories, you are considered an itinerant and your tax home is wherever you work.

Special rules for students and government officials.   Disregard the following days when determining whether you have a tax home outside the possession.

  • Days you were temporarily in the United States as a student (see Student defined, later).

  • Days you were in the United States serving as an elected representative of the possession, or serving full time as an elected or appointed official or employee of the government of the possession (or any of its political subdivisions).

Special rule for seafarers.   You will not be considered to have a tax home outside the possession solely because you are employed on a ship or other seafaring vessel that is predominantly used in local and international waters. For this purpose, a vessel will be considered to be predominantly used in local and international waters if, during the tax year, the total amount of time it is used in international waters and in waters within 3 miles of the possession exceeds the total amount of time it is used in the territorial waters of the United States, another possession, or any foreign country.

Closer Connection Test

You meet the closer connection test if you do not have a closer connection to the United States or a foreign country than to the U.S. possession.

You are considered to have a closer connection to a possession than to the United States or to a foreign country if you have maintained more significant contacts with the possession(s) than with the United States or foreign country. Significant contacts that may be considered include:

  • The location of:

    1. Your permanent home,

    2. Your family,

    3. Your current social, political, cultural, professional, or religious affiliations,

    4. Where you conduct your routine personal banking activities,

    5. The jurisdiction in which you hold a driver's license, and

    6. Charitable organizations to which you contribute.

  • The place of residence you designate on forms and documents.

Your connections to the possession will be compared to the total of your connections with the United States and foreign countries. Your answers to the questions on Form 8898, Part III, will help establish the jurisdiction to which you have a closer connection.

Presence Test

You meet the presence test for the tax year if you meet one of the following conditions.

  1. You were present in the possession for at least 183 days during the tax year.

  2. You were present in the possession for at least 549 days during the 3-year period that includes the current tax year and the 2 immediately preceding tax years. During each year of the 3-year period, you also must be present in the possession for at least 60 days.

  3. You were present in the United States for no more than 90 days during the tax year.

  4. You had $3,000 or less of earned income from U.S. sources and were present for more days in the possession than in the United States during the tax year. See the instructions for line 8 under Specific Instructions, later, for the definition of earned income from U.S. sources.

  5. You had no significant connection (defined later) to the United States during the tax year.

If you are a nonresident alien, see Special rule for nonresident aliens, later.

Days of presence in the United States or U.S. possession.   Generally, you are treated as being present in the United States or in the possession on any day that you are physically present in that location at any time during the day. If, during a single day, you were physically present in the United States and a possession, that day is counted as a day of presence in the possession. If, during a single day, you were physically present in two possessions, that day is counted as a day of presence in the possession in which you have your tax home.

  Count the following days as days of presence in the possession for purposes of the presence test. Do not count them as days of presence in the United States.

  • Days you were outside the possession to receive (or to accompany on a full-time basis a parent, spouse, or child who is receiving) qualified medical treatment (defined later). For this purpose, the child must be your son, daughter, stepchild, foster child, adopted child, or a child lawfully placed with you for legal adoption.

  • Days you were outside the possession because you left or were unable to return to the possession during any 14-day period within which a major disaster occurred in the possession that was declared a disaster area by the President.

  • Days you were outside the possession because you left or were unable to return to the possession during any period for which a mandatory evacuation order was in effect for the area in the possession where you resided.

  Do not count the following days as days of presence in the United States for purposes of the presence test.

  • Days you were in the United States for less than 24 hours when you were traveling between two places outside the United States.

  • Days you were temporarily present in the United States as a professional athlete to compete in a charitable sports event (defined later).

  • Days you were temporarily in the United States as a student (defined later).

  • Days you were in the United States serving as an elected representative of a possession, or serving full time as an elected or appointed official or employee of the government of the possession (or any of its political subdivisions).

Qualified medical treatment.

This is medical treatment provided by (or under the supervision of) a physician for an illness, injury, impairment, or physical or mental condition. The treatment must involve:

  • A period of inpatient care (requiring an overnight stay) in a hospital or hospice and any period immediately before or after that inpatient care to the extent it is medically necessary, or

  • A temporary period of inpatient care (requiring an overnight stay) in a residential medical care facility for medically necessary rehabilitation services.

You must keep records of your qualified medical treatment. For details on the records you must keep, see Pub. 570, Tax Guide for Individuals With Income From U.S. Possessions.

Charitable sports event.

A charitable sports event is one that meets the following conditions.

  • The main purpose is to benefit a qualified charitable organization.

  • The entire net proceeds go to that charitable organization.

  • Volunteers perform substantially all the work.

 
In figuring the days of presence in the United States, you can exclude only the days on which you actually competed in a sports event. You cannot exclude the days on which you were in the United States to practice for the event, to perform promotional or other activities related to the event, or to travel between events.

For a listing of most qualified organizations, go to IRS.gov and click on Charities & Non-Profits at the top of the page.

Student defined.

To qualify as a student, you must be, during some part of each of 5 calendar months during the calendar year (not necessarily consecutive):

  1. A full-time student at a school that has a regular teaching staff, course of study, and regularly enrolled body of students in attendance, or

  2. A student taking a full-time, on-farm training course given by a school described in (1) above or a state, county, or local government.

Full-time student defined.

A full-time student is a person who is enrolled for the number of hours or courses the school considers to be full-time attendance.

School defined.

The term “school” includes elementary schools, junior and senior high schools, colleges, universities, and technical, trade, and mechanical schools. It does not include on-the-job training courses, correspondence schools, and schools offering courses only through the Internet.

Significant connection.   You have a significant connection to the United States if:

  • You have a permanent home (defined later) in the United States,

  • You are registered to vote in any political subdivision of the United States, or

  • You have a spouse or child under 18 whose principal home is in the United States. For this purpose—

    1. A spouse does not include a spouse from whom you are legally separated under a decree of divorce or separate maintenance.

    2. The child must be your son, daughter, stepchild, foster child, adopted child, or a child lawfully placed with you for legal adoption. But a child does not include:

      1. A child who lives in the United States with a custodial parent under a custodial decree or multiple support agreement, or

      2. A child who is in the United States as a student (defined earlier).

Permanent home.

A permanent home generally includes accommodations such as a house, an apartment, or a furnished room that is available at all times, continuously and not solely for short stays. However, if you or your spouse owns the dwelling unit and rents it to someone else during the tax year, the dwelling unit is not your permanent home unless, during that tax year, you use some part of it for personal purposes for more than the greater of:

  • 14 days, or

  • 10% of the days the property is rented to others at a fair rental price.

Generally, the rental property is considered used for personal purposes on any day it is not being rented to someone else at fair rental value for the entire day or is used by you, a family member, or anyone else who has an interest in the property. The rental property is not considered used for personal purposes on any day on which the principal purpose for using the property is to do repair or maintenance work. For more information on determining whether the rental property was used for personal purposes, see Pub. 570.

Special rule for nonresident aliens.   The presence test does not apply to nonresident aliens. Instead, nonresident aliens must meet the substantial presence test discussed in chapter 1 of Pub. 519, U.S. Tax Guide for Aliens. In that discussion, substitute the name of the possession for “United States” and “U.S.” wherever they appear. Also disregard the discussion in that chapter about a Closer Connection to a Foreign Country.

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