Moving to Puerto Rico, the U.S. Virgin Islands, Guam, the CNMI, or American Samoa changes which government gets to tax you, and the IRS wants formal notice. Form 8898 is that notice: a standalone statement, required under IRC §937(c), for the year you first take the position that you became or ceased to be a bona fide resident of a U.S. territory. It is not the thing that makes you a resident; it is the thing that tells the IRS to start looking at whether you really are one.
File Form 8898, by itself and not attached to your return, for any year your worldwide gross income exceeds $75,000 and you begin or end bona fide residence in a U.S. territory; the test for residence itself is the three-part §937 framework of presence, tax home, and closer connection, and skipping the form costs $1,000 under §6688.
Two conditions, both required. First, your worldwide gross income for the year exceeds $75,000, measured before any deductions or exclusions and counting income you may later exclude. The threshold is per person: a spouse's income does not count toward yours, and if both spouses cross it, each files a separate Form 8898. Second, you take a U.S. tax position that you became a bona fide resident of a territory after a year in which you filed as a regular U.S. citizen or resident, or that you ceased to be a bona fide resident after a year in which you filed as one. The covered territories are Puerto Rico, the U.S. Virgin Islands, Guam, the Commonwealth of the Northern Mariana Islands, and American Samoa.
Bona fide residence requires passing all three tests for the year: a presence test, a tax home test (no tax home outside the territory during the year), and a closer connection test (no closer connection to the United States or a foreign country than to the territory). The tax home and closer connection concepts follow the familiar §911 and §7701(b) frameworks, applied through Treas. Reg. §1.937-1.
Treas. Reg. §1.937-1(c)(1) provides five alternatives. Meeting any one satisfies the presence test.
| Alternative | Requirement |
|---|---|
| 183-day rule | Present in the territory at least 183 days during the taxable year |
| 549-day rule | Present in the territory at least 549 days over the taxable year plus the two preceding years, with at least 60 days in each of the three years |
| 90-day rule | Present in the United States no more than 90 days during the taxable year |
| Earned income rule | U.S. earned income no greater than the §861(a)(3)(B) amount ($3,000), and more days present in the territory than in the United States |
| No significant connection | No significant connection to the United States during the taxable year (permanent home, voter registration, spouse or minor child in the U.S.) |
For the year you move to the territory, Treas. Reg. §1.937-1(f)(1) treats the tax home and closer connection tests as satisfied only if all three conditions hold: you were not a bona fide resident of the territory in any of the three preceding tax years; for each of the final 183 days of the move year you had no tax home outside the territory and no closer connection to the United States or a foreign country; and you remain a bona fide resident for each of the three years following the move year. In a 365-day year, the final 183 days begin July 2. Move after that date and the move year generally cannot qualify; bona fide residence starts the following January 1, and income exclusions such as §933 for Puerto Rico start with it.
Form 8898 is due by the due date, including extensions, of your Form 1040 or 1040-NR for the year of the position. Do not attach it to the return. File it by itself by mail to: Internal Revenue Service, 3651 S. IH 35, MS 4301 AUSC, Austin, TX 78741, per the current instructions (Rev. October 2024) and the IRS territory relocation page. Older references to a Philadelphia address are outdated.
Failure to file a required Form 8898, filing late, or filing with incomplete or inaccurate information carries a $1,000 penalty under IRC §6688, subject to a reasonable cause exception. The penalty is small relative to the stakes; the real exposure is the residency position itself.