CNMI Residency

What are the residency requirements I need to meet to qualify for the benefits of low CNMI taxes?

CNMI RESIDENCY REQUIREMENTS

In order to enjoy the relatively low CNMI taxes, you need to file your income tax return as a CNMI resident. The IRS has issued regulations (in January 2006) that contain the requirements for an individual to be considered a CNMI resident. In order to be considered a CNMI resident, you need to meet three tests:

? PHYSICAL PRESENCE

? TAX HOME, and

? CLOSER CONNECTION.

PHYSICAL PRESENCE TEST

You can meet the physical presence test by satisfying ANY ONE of the following four tests:

? Be physically present in the CNMI for at least 183 days during the calendar year, OR
? Do not be physically present in the U.S. for more than 90 days during the calendar year, OR
? Do not earn more than $3,000 during the calendar year from U.S. sources, OR
? Do not have a significant connection to the U.S. (a significant connection would be, for example, having a spouse and a home in the U.S.)

TAX HOME TEST

Generally, to be considered a CNMI resident, you must not have a tax home outside the CNMI at any time during the calendar year. A tax home is your ?principal place of business or employment?.

There is an exception to this requirement for the years that you move into or out of the CNMI.

If you are away from the CNMI for temporary employment, this will not act to change your tax home.

CLOSER CONNECTION TEST

To be considered a CNMI resident, you cannot have a closer connection to the U.S. or to a foreign country than you do to the CNMI. This test is similar to the ?facts and circumstances? test applied prior to the issuance of the regulations in 2006.

Some of the factors to be considered are things like where you do your banking, where you receive your mail, where you vote, where your vehicle is registered, where your personal belongings are, where you have your driver?s license, and where your family lives.