Form 8898

What Is A Form 8898

Form 8898, also known as the Statement for Individuals Who Begin or End Bona Fide Residence in a U.S. Possession, is among the many tax forms created by the Internal Revenue Service (IRS). This form is crucial in reporting significant tax residency status changes, especially for individuals who either commence or terminate their bona fide residency with U.S. possession. In this case, U.S. possessions refer to regions that, although not states are controlled by the U.S. government.

As an international taxpayer, you must acquaint yourself with Income Tax Form 8898 for several reasons. Most importantly, form 8898 IRS is essential when you must notify the IRS about any changes to your residency status within a U.S. possession. Such changes generally have significant implications on your tax computation and the specific tax rules that apply to you.

How to Fill Out Form 8898 IRS

Part I: General Information

Start by entering your name and Social Security Number. Remember that each spouse must file a separate Form 8898 if you're married.

Provide your address before and after your change in bona fide residence status. This is crucial for the IRS to track changes in your residency.

Section 1: Indicate whether you began or ceased to be a bona fide resident of a U.S. possession in a specific tax year. Check the appropriate box and enter the tax year.

Section 2: Confirm if you are a U.S. citizen or resident alien.

Section 3: Enter your worldwide gross income for the specified tax year and the average worldwide gross income for the three years prior.

Part II: Presence in the United States or Possession

Section 4: Enter the number of days you were present in the United States during the tax year.

Section 5: Indicate the days you were present in the possession during the tax year and the two years preceding it.

Part III: Closer Connection to the United States, Foreign Country, or Possession

These sections delve into the specifics of your connections, such as the location of your tax home, principal permanent home, immediate family, personal belongings, and financial activities.

Specify where you kept your personal financial and legal documents.

Provide details about your income sources and investment locations.

Part IV: Source of Income

Sections focus on your business and trade activities within the possession.

Final Steps

Sign and date the form under the penalties of perjury statement.

Mail the completed form to the IRS at the address provided on the form.

When To File Form 8898

You must file Form 8898 with the IRS for the tax year in which you either become or cease to be a bona fide resident of a U.S. possession. You typically need to attach this form to your annual income tax return. For instance, if you established your bona fide residence in Guam in 2023, you should file Form 8898 with your 2023 income tax return.