IRS Form 4563 Guide: American Samoa Income Exclusion Rules

1. Introduction – What is Form 4563?

IRS Form 4563, titled “Exclusion of Income for Bona Fide Residents of American Samoa,” is an official federal tax document. It is governed and administered by the Internal Revenue Service (IRS) under Section 931 of the Internal Revenue Code.

This form allows individuals who are bona fide residents of American Samoa for the entire tax year to exclude income earned from American Samoa sources from their U.S. federal gross income. Completing Form 4563 helps qualified territory residents avoid double taxation while maintaining full compliance with federal tax laws.

2. Purpose of the Form – Why Does This Form Exist?

American Samoa possesses its own local tax system based on modified U.S. Internal Revenue Code rules. Without specific relief mechanisms, U.S. citizens and green card holders residing in American Samoa might face federal income tax on the exact same income taxed by the local territory government.

Form 4563 solves this issue by enforcing Internal Revenue Code Section 931. It provides a legal process for eligible territory residents to exclude local American Samoa income from their U.S. federal tax returns, ensuring that local earnings are reported and taxed primarily at the territory level.

3. Who Needs to File This Form – Eligibility Criteria

You must file Form 4563 if you are required to submit a U.S. federal individual income tax return (Form 1040 or Form 1040-SR) and you meet all three bona fide residency tests for American Samoa under Section 937:

• Presence Test: You were physically present in American Samoa for at least 183 days during the tax year (or satisfy alternative physical presence rules).
• Tax Home Test: You did not have a main tax home outside American Samoa at any time during the tax year.
• Closer Connection Test: You did not have a closer connection to the United States or a foreign country than to American Samoa during the tax year.

4. Who Is Exempt / Not Required to File

Form 4563 is not applicable to every resident or worker in American Samoa. You should not file Form 4563 if:

• U.S. Government Employees: You received wages or salary as an employee of the United States government or any U.S. government agency stationed in American Samoa (U.S. government employee wages cannot be excluded under Section 931).
• Non-Residents of American Samoa: You failed any of the three bona fide residency tests (Presence, Tax Home, or Closer Connection) for the tax year.
• Residents of Other Territories: You are a bona fide resident of Guam, the Commonwealth of the Northern Mariana Islands (CNMI), the U.S. Virgin Islands, or Puerto Rico (other territories follow separate filing forms, such as Form 5074 or Form 8689).

5. When to File – Deadlines and Frequency

Form 4563 is an annual tax attachment. It must be filed once a year attached directly to your U.S. individual income tax return (Form 1040 or Form 1040-SR).

The filing deadline matches your U.S. federal income tax due date. For taxpayers whose main tax home and residence are in American Samoa on April 15, the IRS grants an automatic two-month filing extension to June 15. You can also request an additional extension to October 15 by filing Form 4868.

6. Where and How to File

Form 4563 cannot be submitted by itself. It must be attached directly behind your Form 1040 or Form 1040-SR federal tax return.

Taxpayers can submit Form 4563 electronically using authorized tax software. If submitting a paper tax package, mail your Form 1040 with attached Form 4563 to the designated IRS address as per instructions for international and U.S. territory tax returns.

7. Step-by-Step Instructions to Fill the Form

Completing Form 4563 requires establishing your residency qualification and calculating excludable income. The table below outlines the primary sections of the form:

Form Section	Section Name	Filing Instructions
Part I	Bona Fide Residency Tests	Answer presence test questions, state physical days in American Samoa, and confirm your tax home and closer connection status.
Part II	Exclusion of Income	List and sum all American Samoa source income to exclude (such as local wages, business profits, dividends, and interest).
Part III	Deduction Allocations	Calculate and disallow deductions or credits directly allocable to the excluded income to prevent double tax benefits.

8. Required Documents/Information Needed Before Filling

Before completing Form 4563, gather the following personal travel and income records:

• Travel logs, airline itineraries, or passport stamps proving physical presence in American Samoa for at least 183 days during the tax year.
• Wage statements (Form W-2AS or local equivalent) issued by non-U.S. government employers in American Samoa.
• Income records for local business operations, interest, dividends, or rental property located in American Samoa.
• Records showing local housing, driver’s license, voter registration, and family ties supporting your closer connection to American Samoa.

9. Common Mistakes to Avoid

Errors on Form 4563 can lead to rejected exclusions and unexpected federal tax bills. Watch out for these common errors:

• Excluding U.S. Government wages: Attempting to exclude civilian or military wages paid by the U.S. government (Section 931 explicitly forbids excluding federal government pay).
• Double-deducting expenses: Claiming deductions or tax credits on Form 1040 that are directly allocable to the excluded American Samoa income.
• Failing the 183-day presence test: Claiming bona fide residency without keeping accurate travel records proving you met the physical presence rule.
• Counting U.S. source income: Attempting to exclude income earned from sources within the 50 U.S. states or foreign countries.

10. Penalties for Non-Filing or Errors

Failing to file Form 4563 correctly while omitting American Samoa income can cause the IRS to disallow your exclusion. The IRS will recharacterize the excluded income as fully taxable U.S. gross income, resulting in substantial back taxes.

Underpaid federal income taxes trigger failure-to-pay penalties, daily interest charges, and potential 20% accuracy-related penalties under Internal Revenue Code Section 6662. Intentionally claiming false territory residency carries civil fraud and federal perjury penalties.

11. Related Forms or Schedules

Form 4563 interacts with several individual and U.S. territory tax forms, including:

• Form 1040 – U.S. Individual Income Tax Return
• Form 1040-SS – U.S. Self-Employment Tax Return (Including Special Instructions for American Samoa)
• Form 8898 – Statement for Individuals Beginning or Ending Bona Fide Residence in a U.S. Possession
• Form 5074 – Allocation of Individual Income Tax to Guam or the Commonwealth of the Northern Mariana Islands
• Form 8689 – Allocation of Individual Income Tax to the U.S. Virgin Islands

12. Frequently Asked Questions (FAQs)

What is Internal Revenue Code Section 931?

IRC Section 931 is the federal tax code provision that allows qualifying bona fide residents of American Samoa to exclude local territory source income from their U.S. federal gross income.

Can U.S. military personnel stationed in American Samoa use Form 4563?

No. Pay received for active service in the U.S. Armed Forces or civilian service for the U.S. government is considered U.S. government pay and cannot be excluded on Form 4563.

What happens if I moved to American Samoa halfway through the year?

To qualify for the Section 931 exclusion on Form 4563, you must generally be a bona fide resident of American Samoa for the entire tax year, subject to specific move-in rules under Section 937.

Do I still have to file a local tax return in American Samoa?

Yes. Form 4563 only excludes local income from your U.S. federal income tax return. You must still file a local territory tax return with the American Samoa Tax Office and pay any local income taxes due.

Does Form 4563 exclude self-employment tax?

No. Form 4563 excludes income from federal income tax. Bona fide residents of American Samoa with self-employment earnings may still owe U.S. self-employment taxes (Social Security and Medicare) calculated on Form 1040-SS.

How do I prove I met the 183-day presence test?

You can prove physical presence by keeping detailed travel logs, boarding passes, passport stamps, local utility bills, or employment records showing you were physically in American Samoa for at least 183 days during the calendar year.

13. Conclusion – Key Takeaways

IRS Form 4563 provides essential tax relief for bona fide residents of American Samoa by allowing them to exclude local territory income from U.S. federal income taxation under IRC Section 931. This prevents double taxation and supports local territory tax administration.

To successfully claim the exclusion, ensure you satisfy the three bona fide residency tests, keep thorough travel and income records, and avoid attempting to exclude U.S. government pay. Attaching Form 4563 to your annual Form 1040 ensures your territory income is handled accurately and in full compliance with IRS rules.