4563 Exclusion of Income From OMB No, 1545-0173
Form Sources in United States Possessions

> See instructions below. | OF 3} 4
Department of the Treasury > Attach to Form 1040.
Internal Revenue Service»

Name(s) as shown on Form 1040

Your social security number

Name of possession in which you worked

Year (If self-employed, write ‘‘self-employed’’ next to the name of the possession)
1982
1983
1984
Total Gross Income and Possession Exclusion
Dates you were employed or engaged Gross income during periods shown in columns (b) and (c) from:
ina business in a U.S. possession
(dates are inclusive) Sources in U.S. possessions Sources outside
Salaries, wages, or US andUS. Sources n
Year From To- active conduct of a Other income possessions,
trade or business
(a) (b) (©) (@) ) ® ®)
1 1982
$ $ $ $
2 1983
3 1984
4 Totas .. . re) $ $ $
5 Add columns (d) and (e), line 4. This is your gross income from sources in U.S. possessions. re i)
6 Add columns (f) and (g), line 4, and the amount on line 5. This is your total gross income ce ee ee LG
7 Multiply the amount on line 6 by 80% (.80) and write the result. . $
8 Multiply the amount on line 6 by 50% (.50) and write the result. . $
Note: /f the amount on line 5 is equal to or more than the amount on line 7, and the amount in column @,
line 4, is equal to or more than the amount on line 8, you qualify to take the possession exclusion. If
you choose to take the exclusion, complete line 9.
9 Add the amounts in columns (d), (e), and (f), line 3, that you received outside the United States. This is the
amount you may exclude from your 1984 gross income . . $

General Instructions

Paperwork Reduction Act Notice.—We ask for this
information to carry out the Internal Revenue laws of the
United States. We need it to ensure that taxpayers are
complying with these laws and to allow us to figure and
collect the right amount of tax. You are required to give us
this information.

Purpose of Form

Use Form 4563 if you are a US. citizen who worked ina
U.S. possession and you want to see if you qualify for the
“possession exclusion.” If you qualify and choose to take
the exclusion, also use Form 4563 to figure the amount of
the exclusion.

Additional Information

You may want to get Publication 570, Tax Guide for U.S.
Citizens Employed in U.S. Possessions, for more
information.

Who 0 Qualifies for the Exclusion

You will qualify for the exclusion if:

@ You are a U.S. citizen who worked in one of the possessions
listed below during the 3-year period (or part thereof) ending
on the last day of your 1984 tax year; and

© At least 80% of your total gross income, line 6, was from
sources ina U.S. possession; and

@ At least 50% of your total gross income, line 6, was from
wages, salaries, or your active conduct of a trade or
business in a U.S. possession.

U.S. Possessions.—You may qualify for the exclusion if

you worked in the following areas:

American Samoa Howland Island

Wake Island Baker Island

Midway Islands Jarvis Island

Palmyra Other U.S. islands, cays,
Johnston Island and reefs that are not part of
Kingman Reef any of the 50 States.

Form 4563 (1984)


Form 4563 (1984)

Page 2

The following areas do not qualify you for the possession
exclusion: Guam, the Northern Mariana Islands, the Virgin
Islands, and Puerto Rico. See Publication 570 if you worked
in any of these four areas.

Note: /f you do not qualify for the possession exclusion,
you may qualify for benefits relating to earned income
from sources outside the United States.To take these
benefits, your tax home must be in a foreign country
and you must be a resident of, or present in, a foreign
country for a specified period of time. A U.S. possession
or territory is not a foreign country. To see if you qualify
for benefits relating to earned income from sources
outside the United States, get Publication 54, Tax
Guide for U.S. Citizens and Resident Aliens Abroad.

Where to File

Attach this form to your Form 1040 and file both forms
with the Internal Revenue Service Center, Philadelphia, PA
19244-4444,

Note: /f you do not take the exclusion, follow the
instructions for Form 1040. Report all your taxable
income, including income from foreign and possession
sources. Be sure to take all exemptions, deductions, and
credits that you are entitled to take. File your return with
the Internal Revenue Service Center shown in the Form
1040 instructions for the place where you live.

Figuring Your Tax on Form 1040

Income You Must Report.— Even if you may take the
exclusion, you must still report the following income on
your Form 1040:

@ Income you received from U.S. sources. (The United
States means the 50 States and the District of Columbia.)

@ Income you or your agent received in the United States
from any source. (This generally includes salary you
earned in a U.S. possession that your employer
deposited in your bank account in the United States.)

@ Income you received as an employee of the U.S.
Government or any of its agencies.

@ Allincome you received during the part of your 1984 tax
year that is not part of the period shown in columns (b)
and (c) of line 3. The source of that income or the place
where it was received does not matter. It does not
qualify for the possession exclusion.

Deductions You May Take.— The following deductions
are allowed whether or not they are connected with U.S.
source income.

© One personal exemption of $1,000.

© Losses from transactions you entered into for profit, but
that were not connected with a trade or business. The
transactions must be of a kind whose profits, if there had
been any, would have been taxable. The losses may not
have been reimbursed by insurance.

® Casualty and theft losses to nonbusiness property in the
United States. Use Form 4684, Casualties and Thefts, to
report them.

@ Charitable contributions (Schedule A, Form 1040).

Other deductions are allowed only if they relate to
income from U.S. sources. For example, a teacher may
deduct the business expense of teaching aids bought to use
while teaching in the United States, but not aids bought to
use in a U.S. possession.

Benefits You May Not Take.— The following benefits are
not allowed if you take the possession exclusion.

@ The zero bracket amount.

@ Exemptions for age, blindness, your spouse, or any
dependents.

@ Income averaging (Schedule G, Form 1040).

@ Credit or deduction for income taxes paid to a foreign
country or a U.S. possession.

@ Deduction for medical and dental expenses.
@ Earned income credit.

© Deduction for a married couple when both work (Schedule
W, Form 1040).

Lines 34a through 38, Form 1040.— If you take the
exclusion, you must itemize your deductions on Schedule A
(Form 1040). Follow the instructions for line 34a on page 13
of the Form 1040 instructions, paying special attention to
the section titled After you've completed Schedule A, to
determine what entries you should make on lines 34a and 35
of Form 1040. Enter $1,000 on line 36 of Form1040. (If you
take the exclusion, you may claim only one personal
exemption of $1,000.) Subtract line 36 from line 35 and
enter the result on line 37. Follow the instructions for line 38
on page 14 of the Form 1040 instructions to figure your tax.

Specific Instructions

Lines 1, 2, and 3.— Enter in columns (b) and (c) the dates
that you were employed or engaged in a business in a U.S.
possession during the 3-year period ending on the last day
of your 1984 tax year.

Enter in columns (qd), (e), (f), and (g) your gross income
for the period shown in columns (b) and (c). If you file a
joint tax return with your spouse, see Publication 570.

Note: Publication 570 explains how to determine the
source of income.

Line 9.—If you qualify, you may exclude the total earned
income, investment income, and capital gains you received
during the tax year from sources outside the United States.
The amounts in columns (d), (e), and (f), line 3 that you
received outside the United States may be excluded from
your 1984 gross income.

Note: Taking the exclusion may not be to your advantage
because it limits the other tax benefits you may use. You
should figure your tax both with and without the exclusion
to see which is better for you.