For most people living on Guam, the answer is no: Guam residents do not pay federal income tax to the IRS. They pay income tax to the Government of Guam under a territorial system that mirrors the federal Internal Revenue Code. The exceptions matter, though. Social Security and Medicare payroll taxes still flow to the federal government, self-employed residents still owe self-employment tax to the IRS, and people who earn Guam-source income without being bona fide Guam residents file with the IRS in the normal way.
Where Your Income Tax Goes
Guam runs what is often called a “mirror code.” Section 31 of the Organic Act of Guam, codified at 48 U.S.C. § 1421i, provides that U.S. income tax laws “shall be held to be likewise in force in Guam.” Guam adopts the federal rules but swaps the key terms, so “Guam” takes the place of “United States” and the Governor’s delegate replaces the Secretary’s. The resulting tax is the Guam Territorial income tax, and it is payable to the Government of Guam, not the U.S. Treasury.1Office of the Law Revision Counsel. 48 USC 1421i
Residents file a Guam version of Form 1040, labeled the Guam Individual Income Tax Return, with Guam’s Department of Revenue and Taxation.2GovGuamDocs. Forms from the Guam Department of Revenue and Taxation Rates and brackets generally track the federal ones because changes to federal law carry through automatically.
If You Are a Bona Fide Resident
Whether you file with Guam or the IRS turns on bona fide residency. Under 26 U.S.C. § 937, you qualify for a tax year if you meet two tests:3Office of the Law Revision Counsel. 26 USC 937 – Residence and Source Rules Involving Possessions
- You were present in Guam for at least 183 days during the year.
- Your tax home was in Guam for the whole year, and your closer connection was to Guam rather than to the United States or any foreign country.
Treasury regulations recognize alternatives to the straight 183-day count, including being present in Guam at least 549 days over a rolling three-year period (with at least 60 days each year) or spending no more than 90 days in the United States during the tax year.4eCFR. 26 CFR 1.937-1 – Bona Fide Residency in a Possession
If you are a bona fide resident for the whole year, you file only with Guam’s Department of Revenue and Taxation and report your worldwide income on that return. You are not required to file a separate return with the IRS or pay federal income tax.5Internal Revenue Service. Publication 570 – Tax Guide for Individuals With Income From U.S. Possessions Withholding and estimated payments count toward your Guam liability whether they were paid to Guam or to the United States.
One boundary worth flagging: certain federal tax credits are off the table on a U.S. return for bona fide Guam residents. You cannot claim the Earned Income Credit or the Additional Child Tax Credit on a federal Form 1040. Check Guam’s return for an equivalent.6Internal Revenue Service. Bona Fide Residents of Guam – Tax Credits
What You Still Owe the IRS
Even bona fide Guam residents who owe no federal income tax usually have some federal tax exposure through payroll and self-employment.
Social Security and Medicare (FICA)
FICA works the same way in Guam as on the mainland. Employers in Guam must withhold and deposit Social Security and Medicare taxes under the same rules that apply to stateside employers, and those deposits go to the federal government by electronic funds transfer.7Internal Revenue Service. Persons Employed in a U.S. Possession – FICA A Guam employer therefore makes two separate sets of payroll deposits: FICA to the IRS, and income tax withholding to Guam. FICA obligations are reported on Form 941-SS rather than the mainland Form 941.
Some workers are exempt from FICA in the territories, including foreign agricultural workers on H-2A visas, students employed by their school, and certain nonresident aliens in visa categories such as F-1 and J-1.7Internal Revenue Service. Persons Employed in a U.S. Possession – FICA
Self-Employment Tax
If you have net self-employment earnings of $400 or more and you are not required to file a U.S. income tax return, you still report and pay self-employment tax to the IRS using Form 1040-SS.8Internal Revenue Service. Instructions for Form 1040-SS The tax funds Social Security and Medicare, and the requirement applies to residents of Guam, American Samoa, the U.S. Virgin Islands, and the Northern Mariana Islands.9Internal Revenue Service. Individuals Living or Working in a U.S. Territory
When You File With the IRS Instead
If you are a U.S. citizen or resident alien who earns Guam-source income but does not qualify as a bona fide resident of Guam for the year, you file your income tax return with the IRS. You report worldwide income on a standard U.S. Form 1040 and include your Guam-source earnings there. You do not file a separate return with Guam for that year.5Internal Revenue Service. Publication 570 – Tax Guide for Individuals With Income From U.S. Possessions
Add a form if the numbers are large enough. When your adjusted gross income is $50,000 or more and your gross income from Guam sources is $5,000 or more, attach Form 5074 to your U.S. return. The IRS and Guam use that form to divide the income taxes between the two jurisdictions.5Internal Revenue Service. Publication 570 – Tax Guide for Individuals With Income From U.S. Possessions
Military and Federal Civilian Employees on Guam
Active-duty service members stationed in Guam who keep a legal domicile in a U.S. state are covered by the Servicemembers Civil Relief Act. Military orders do not change their legal domicile, so they generally file with the IRS and their home state rather than with Guam. Behind the scenes, the federal income taxes withheld from their pay get transferred from the U.S. Treasury to Guam’s treasury under 26 U.S.C. § 7654(d).10Office of the Law Revision Counsel. 26 USC 7654 – Coordination of United States and Certain Possession Individual Income Taxes The same transfer rule applies to civilian federal employees working in Guam.
Moving To or From Guam
A change in residency triggers a separate filing. If you move to or from Guam and your worldwide income for the year is more than $75,000, you must file Form 8898, Statement for Individuals Who Begin or End Bona Fide Residence in a U.S. Possession.11Internal Revenue Service. Moving to or From a United States (U.S.) Territory/Possession For married taxpayers, the $75,000 threshold applies to each spouse separately. The form is due by the filing deadline for your Form 1040, including extensions, and is submitted on its own rather than attached to the return.9Internal Revenue Service. Individuals Living or Working in a U.S. Territory
Missing Form 8898 when it is required carries a $1,000 penalty, which can also apply for incomplete or incorrect information. The penalty is waived only on a showing of reasonable cause rather than willful neglect, and it is in addition to any potential criminal penalties.12Internal Revenue Service. Instructions for Form 8898 Put it on the checklist before the move, not after.