Taxmap/pubs/p570-001.htm#TXMP1126afb2
Filing U.S. Tax Returns

Taxmap/pubs/p570-001.htm#TXMP536431cb
Note.You cannot ask the Internal Revenue Service to figure your tax if you use the extension of time to file.

Taxmap/pubs/p570-001.htm#TXMP17d4df17 Extension beyond 4 months.

Further extensions of the time to file are granted only under very unusual circumstances. If you need additional time to file, apply for the extension either in a letter or by filing Form 2688. Extensions beyond the 4-month automatic extension are not granted as a matter of course. You must show reasonable cause.

Except in undue hardship cases, an application for extension on Form 2688 will not be accepted until you have taken advantage of the automatic 4-month extension.

Taxmap/pubs/p570-001.htm#TXMP52977417 Where to file.

If you have to file Form 1040 with the United States, and you use Form 4563 to exclude income from American Samoa, Guam, and the CNMI, file your return with the Internal Revenue Service Center, Philadelphia, PA 19255-0215. If you do not qualify for the possession exclusion, mail your return to the address shown in the Form 1040 instructions for the possession or state in which you reside.

Taxmap/pubs/p570-001.htm#TXMP6da1161c E-file.

If you must file a U.S. income tax return, you may be able to file a paperless return using IRS e-file. See your form instructions or visit our web site at www.irs.gov.

Taxmap/pubs/p570-001.htm#TXMP493c1768 Self-Employment Tax

SE tax

A U.S. citizen who is self-employed must pay self-employment tax on net self-employment earnings of $400 or more. This rule applies whether or not the earnings are excludable from gross income (or whether or not a U.S. income tax return must otherwise be filed).

Your payments of self-employment tax contribute to your coverage under the social security system. Social security coverage provides you with old age, survivor, and disability benefits and hospital insurance.

The self-employment tax rate is 15.3% (12.4% social security tax plus 2.9% Medicare tax). The maximum amount of earnings subject to social security (old age, survivor, and disability insurance) tax is $87,900 for 2004. All earnings are subject to Medicare (hospital insurance) tax.

Taxmap/pubs/p570-001.htm#TXMP0c8a7f93 Self-employment tax form.

If you have to file Form 1040 with the United States, figure your self-employment tax on Schedule SE (Form 1040) and attach it to Form 1040.

If you are a resident of American Samoa, Guam, the CNMI, Puerto Rico, or the Virgin Islands who has net self-employment income, and you do not have to file Form 1040 with the United States, use Form 1040-SS to figure your self-employment tax.

If you are a resident of Puerto Rico, you can file Form 1040-PR instead of Form 1040-SS. Form 1040-PR is the Spanish-language version of Form 1040-SS.

Taxmap/pubs/p570-001.htm#TXMP3a2a858a Self-employment tax deduction.

You can deduct one-half of your self-employment tax on Form 1040, line 30, in figuring adjusted gross income. This is an income tax deduction only; it is not a deduction in figuring net earnings from self-employment.

If you are a bona fide resident of American Samoa or Puerto Rico, and you exclude your self-employment income from gross income, you cannot take the deduction on Form 1040, line 30, because the deduction is related to excluded income.

If part of your self-employment income is excluded, only the part of the deduction that is based on the nonexcluded income is allowed. This would happen if, for instance, you have two businesses, and only the income from one of them is excludable.

Figure the tax on the nonexcluded income by multiplying your total self-employment tax (from Schedule SE) by the following fraction.

Self-employment income that is not excluded Total self-employment income (including excluded income)

The result is your self-employment tax on nonexcluded income. You can deduct one-half of this amount on Form 1040, line 30.

Taxmap/pubs/p570-001.htm#TXMP6b363f6e Double Taxation

A mutual agreement procedure exists to settle issues where there is an inconsistency between the tax treatment by the IRS and the taxing authorities of the following possessions.

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

These issues usually involve allocations of income, deductions, credits, or allowances between related persons, determinations of residency, and determinations of the source of income and related expenses.

Send your written request for assistance under this procedure to: Internal Revenue Service   Director, International   Attn: Office of Tax Treaty   SE:LM:IN:T   1111 Constitution Avenue, N.W., MT-329A   Washington, DC 20224

Your request must contain a statement that assistance is requested under the mutual agreement procedure with the possession. It must also contain all the facts and circumstances relating to your particular case. It must be signed and dated. To avoid unnecessary delays, make sure you include all of the following information.

• Your name, address, and social security number.
• The name, address, and social security number of the related person in the possession (if one is involved).
• The tax year(s) in question and the Internal Revenue Service Center where your return was filed.
• If income tax is involved, the type of income, a description of the transaction, activities, or other pertinent circumstances, and the positions taken by you and the possession tax agency.
• The amount of the item (income, deduction, or credit) involved and the amount of tax the possession assessed or proposed to assess.
• A description of the control and business relationships between you and the related person in the possession, if that applies.
• The status of your tax liability for the year(s) in question and, if it applies, the status of the tax liability of the related person in the possession.
• Whether you or the related person, if one is involved, is entitled to any possession tax incentive or subsidy program benefits for the year(s) in question.
• Copies of any correspondence received from the possession tax agency and copies of any material you provided to them.
• Copy of the possession tax return(s) for the year(s) in question.
• Whether a foreign tax credit was claimed on your federal tax return for all or part of the possession tax paid or accrued on the item in question.
• Whether your federal return or the return of the related person, if there is one, was examined, or is being examined.
• A separate document signed and dated by you that you consent to the disclosure to the designated possession tax official of any or all of the items of information set forth in, or enclosed with, the request for assistance under this procedure.

Taxmap/pubs/p570-001.htm#TXMP1d9551c8 Credit or refund.

In addition to the tax assistance request, if you seek a credit or refund of any overpayment of United States tax paid on the income in question, you should file a claim on Form 1040X, Amended U.S. Individual Income Tax Return. Indicate on the form that a request for assistance under the mutual agreement procedure with the possession has been filed. Attach a copy of the request to the form.

You should take whatever steps must be taken under the possession tax code to prevent the expiration of the statutory period for filing a claim for credit or refund of a possession tax.

Previous Page:  Publication 570 - Tax Guide for Individuals With Income from U.S. Possessions - Tax Guide for Individuals With Income From U.S. Possessions Next Page:  Publication 570 - Tax Guide for Individuals With Income from U.S. Possessions - Filing Requirements for Individuals in U.S. Possessions Use     to find additional instances of index items.