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taxmap/pubs/p570-001.htm#TXMP6cbbb886 Chapter 1 Bona Fide Residence(p3)

Bona Fide Residence

In order to qualify for certain tax benefits (see chapter 3), you must be a bona fide resident of American Samoa, the CNMI, Guam, Puerto Rico, or the USVI for the entire tax year.

Generally, you are a bona fide resident of one of these possessions (the relevant possession) if, during the tax year, you:

• Meet the presence test,
• Do not have a tax home outside the relevant possession, and
• Do not have a closer connection to the United States or to a foreign country than to the relevant possession.

For tax years ending after January 31, 2006, use the information in this chapter to determine if you were a bona fide resident.

For the transition rules that apply to your 2004 and 2005 tax returns, see chapter 1 of the 2005 revision of Publication 570. This is available at www.irs.gov/pub/irs-prior/p570--2005.pdf.

taxmap/pubs/p570-001.htm#TXMP6d6f2ccc Special rule for members of the U.S. Armed Forces.(p3)

If a member of the U.S. Armed Forces qualified as a bona fide resident of the relevant possession in an earlier tax year, his or her absence from that possession during the current tax year in compliance with military orders will not affect the individual's status as a bona fide resident. Likewise, being in a possession solely in compliance with military orders will not qualify an individual for bona fide residency. Also see the special income source rule for members of the U.S. Armed Forces in chapter 2, under Compensation for Labor or Personal Services.

taxmap/pubs/p570-001.htm#TXMP6924108b Presence Test(p3)

Presence Test

If you became a bona fide resident before October 23, 2004, you must meet the new presence test for tax years beginning after October 22, 2004, in order to continue in that status. If you are a calendar year taxpayer, this applies to your tax returns for 2005 and later years.

If you are a U.S. citizen or resident alien, you will satisfy the presence test for the entire tax year if you meet one of the following conditions.

1. You were present in the relevant possession for at least 183 days during the tax year.
2. You were present in the relevant 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 must be present in the relevant 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 earned income in the United States of no more than a total of $3,000 and were present for more days in the relevant possession than in the United States during the tax year. Earned income is pay for personal services performed, such as wages, salaries, or professional fees.
5. You had no significant connection to the United States during the tax year.

taxmap/pubs/p570-001.htm#TXMP79f6ccb0 Special rule for nonresident aliens.(p3)

Conditions (1) through (5) above do not apply to nonresident aliens of the United States. Instead, nonresident aliens must meet the substantial presence test discussed in chapter 1 of Publication 519. 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.

taxmap/pubs/p570-001.htm#TXMP195d286b Days of Presence in the United States or Relevant Possession(p3)

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 relevant possession on any day that you are physically present in that location at any time during the day.

taxmap/pubs/p570-001.htm#TXMP4015282d Days of presence in a possession.(p3)

You are considered to be present in the relevant possession on any of the following days.

1. Any day you are physically present in that possession at any time during the day.
2. Any day you are outside of the relevant possession in order to receive, or to accompany any of the following family members to receive, qualifying medical treatment (see Qualifying Medical Treatment, on this page).
   1. Your parent.
   2. Your spouse.
   3. Your child, who is your son, daughter, stepson, stepdaughter, adopted child, or eligible foster child.
3. Any day you are outside the relevant possession because you leave or are unable to return to the relevant possession during any:
   1. 14-day period within which a major disaster occurs in the relevant possession for which a Federal Emergency Management Agency (FEMA) notice of a Presidential declaration of a major disaster is issued in the Federal Register, or
   2. Period for which a mandatory evacuation order is in effect for the geographic area in the relevant possession in which your main home is located.

If, during a single day, you are physically present:

• In the United States and in the relevant possession, that day is considered a day of presence in the relevant possession; or
• In two possessions, that day is considered a day of presence in the possession where your tax home is located (see Tax Home, later).

taxmap/pubs/p570-001.htm#TXMP1e1bd54e Adopted child.(p3)

An adopted child is always treated as your own child. An adopted child includes a child lawfully placed with you for legal adoption.

taxmap/pubs/p570-001.htm#TXMP77dc6ae1 Eligible foster child.(p3)

An eligible foster child is any child placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction.

taxmap/pubs/p570-001.htm#TXMP74561b3d Days of presence in the United States.(p3)

You are considered to be present in the United States on any day that you are physically present in the United States at any time during the day. However, do not count the following days as days of presence in the United States.

1. Any day you are temporarily present in the United States in order to receive, or to accompany a parent, spouse, or child who is receiving, qualifying medical treatment. "Child" is defined under item 2c above. "Qualifying medical treatment" is defined below.
2. Any day you are in the United States for less than 24 hours when you are traveling between two places outside the United States.
3. Any day you are temporarily present in the United States as a professional athlete to compete in a charitable sports event (defined later).
4. Any day you are temporarily in the United States as a student (defined later).
5. Any day you are in the United States serving as an elected representative of the relevant possession, or serving full time as an elected or appointed official or employee of the government of that possession (or any of its political subdivisions).
6. Any day you are temporarily present in the United States because you leave or are unable to return to the relevant possession during any:
   1. 14-day period within which a major disaster occurs in the relevant possession for which a Federal Emergency Management Agency (FEMA) notice of a Presidential declaration of a major disaster is issued in the Federal Register, or
   2. Period for which a mandatory evacuation order is in effect for the geographic area in the relevant possession in which your main home is located.

taxmap/pubs/p570-001.htm#TXMP500fb369 Qualifying Medical Treatment(p3)

Qualifying Medical Treatment

Such treatment is generally provided by (or under the supervision of) a physician for an illness, injury, impairment, or physical or mental condition. The treatment generally involves:

• Any period of inpatient care that requires 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
• Any temporary period of inpatient care in a residential medical care facility for medically necessary rehabilitation services.

With respect to each qualifying medical treatment, you must prepare (or obtain) and maintain documentation supporting your claim that such treatment meets the criteria to be considered days of presence in the relevant possession. You must keep the following documentation.

1. Records that provide:
   1. The patient's name and relationship to you (if the medical treatment is provided to a person you accompany);
   2. The name and address of the hospital, hospice, or residential medical care facility where the medical treatment was provided;
   3. The name, address, and telephone number of the physician who provided the medical treatment;
   4. The date(s) on which the medical treatment was provided; and
   5. Receipt(s) of payment for the medical treatment.
2. Signed certification by the providing or supervising physician that the medical treatment met the requirements for being qualified medical treatment, and setting forth:
   1. The patient's name,
   2. A reasonably detailed description of the medical treatment provided by (or under the supervision of) the physician,
   3. The dates on which the medical treatment was provided, and
   4. The medical facts that support the physician's certification and determination that the treatment was medically necessary.

taxmap/pubs/p570-001.htm#TXMP746db150 Charitable Sports Event(p4)

Charitable Sports Event

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

• The main purpose is to benefit a qualified charitable organization.
• The entire net proceeds go to charity.
• 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 the charitable 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.

taxmap/pubs/p570-001.htm#TXMP0f60760e Student(p4)

Student

To qualify as a student, you must be, during some part of each of any 5 calendar months during the calendar year:

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 by a state, county, or local government agency.

The 5 calendar months do not have to be consecutive.

taxmap/pubs/p570-001.htm#TXMP6a2eda55 Full-time student.(p4)

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.

taxmap/pubs/p570-001.htm#TXMP1522305f School.(p4)

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.

taxmap/pubs/p570-001.htm#TXMP67b20cc8 Significant Connection(p4)

Significant Connection

One way in which you can meet the presence test is to have no significant connection to the United States during the tax year. This section looks at the factors that determine if a significant connection exists.

You are treated as having a significant connection to the United States if you:

1. Have a permanent home in the United States,
2. Are currently registered to vote in any political subdivision of the United States, or
3. Have a spouse or child (see item 2c under Days of presence in a possession, earlier) who is under age 18 whose main home is in the United States, other than:
   1. A child who is in the United States because he or she is the child of divorced or legally separated parents and who is living 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.

For the purpose of determining if you have a significant connection to the United States, the term "spouse" does not include a spouse from whom you are legally separated under a decree of divorce or separate maintenance.

taxmap/pubs/p570-001.htm#TXMP1f8db325 Permanent home.(p4)

A permanent home generally includes an accommodation such as a house, an apartment, or a furnished room that is either owned or rented by you or your spouse. The dwelling unit must be available at all times, continuously, not only for short stays.

taxmap/pubs/p570-001.htm#TXMP6558f050 Exception for rental property.(p4)

If you or your spouse own the dwelling unit and at any time during the tax year it is rented to someone else at fair rental value, it will be considered a permanent home only if you or your spouse uses that property for personal purposes for more than the greater of:

• 14 days, or
• 10% of the number of days during that tax year that the property is rented to others at a fair rental value.

You are treated as using rental property for personal purposes on any day the property is not being rented to someone else at fair rental value for the entire day.

A day of personal use of a dwelling unit is also any day that the unit is used by any of the following persons.

• You or any other person who has an interest in it, unless you rent it to another owner as his or her main home under a shared equity financing agreement.
• A member of your family or a member of the family of any other person who has an interest in it, unless the family member uses the dwelling unit as his or her main home and pays a fair rental price. Family includes only brothers and sisters, half-brothers and half-sisters, spouses, ancestors (parents, grandparents, etc.), and lineal descendants (children, grandchildren, etc.).
• Anyone under an arrangement that lets you use some other dwelling unit.
• Anyone at less than a fair rental price.

However, any day you spend working substantially full time repairing and maintaining (not improving) your property is not counted as a day of personal use. Whether your property is used mainly for this purpose is determined in light of all the facts and circumstances, such as:

• The amount of time you devote to repair and maintenance work,
• How often during the tax year you perform repair and maintenance work on this property, and
• The presence and activities of companions.

See Publication 527, Residential Rental Property, for more information about personal use of a dwelling unit.

taxmap/pubs/p570-001.htm#TXMP549daa20 (p4)

taxmap/pubs/p570-001.htm#TXMP190e5411
Example—significant connection.(p4)

Ann Green, a U.S. citizen, is a sales representative for a company based in Guam. Ann lives with her husband and young children in their house in Guam, where she is also registered to vote. Her business travel requires her to spend 120 days in the United States and another 120 days in foreign countries. When traveling on business, Ann generally stays at hotels but sometimes stays with her brother, who lives in the United States. Ann's stays are always of short duration and she asks her brother's permission to stay with him. Her brother's house is not her permanent home, nor does she have any other accommodations in the United States that would be considered her permanent home. Ann satisfies the presence test because she has no significant connection to the United States.

taxmap/pubs/p570-001.htm#TXMP75640b1a
Example—presence test.(p5)

Eric and Wanda Brown live for part of the year in a condominium, which they own, in the CNMI. They also own a house in Maine where they live for 120 days every year to be near their grown children and grandchildren. The Browns are retired and their only income is from pension payments, dividends, interest, and social security benefits. In 2007, they spent only 175 days in the CNMI because of a 70-day vacation to Europe and Asia.

Thus, in 2007, the Browns were not present in the CNMI for at least 183 days, were present in the United States for more than 90 days, and had a significant connection to the United States because of their permanent home. However, the Browns still satisfied the presence test with respect to the CNMI because they had no earned income in the United States and were physically present for more days in the CNMI than in the United States.

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 - Tax Home Use   to find additional occurrences of topic items.