U.S. territories have separate, autonomous income tax systems, but they do not have their own separate systems for social security. The IRS is responsible for ensuring that self-employed individuals who live and work in U.S. territories -- American Samoa, Guam, Puerto Rico, the Commonwealth of the Northern Mariana Islands (CNMI) or the U.S. Virgin Islands-- comply with the requirements for paying self-employment tax. You must pay your self-employment tax to the IRS if you are self-employed (even if only on a part-time basis) and have net earnings of $400 or more unless you are a nonresident alien for purposes of self-employment tax, as defined below. You are self-employed if you carry on a trade or business as a sole proprietor or independent contractor, are a member of a partnership that carries on a trade or business or are otherwise in business for yourself. A nonresident alien for purposes of self-employment tax is an individual who is a nonresident alien of the United States, and is not a resident of American Samoa, Guam, Puerto Rico, the Northern Mariana Islands (CNMI) or the U.S. Virgin Islands. Reporting self-employment tax: If you are required to file Form 1040 or Form 1040-SR with the IRS, use Schedule SE to compute self-employment tax and submit it to the IRS with your Form 1040 or Form 1040-SR. If you are not required to file Form 1040 or Form 1040-SR with the IRS, file Form 1040-SS, U.S. Self-Employment Tax Return. Beginning with tax year 2023, a new Spanish (sp) version, Form 1040-SS (sp) replaces Form 1040-PR. This form must be filed with the U.S. Internal Revenue Service at the address shown in the instructions. Do not submit your Schedule SE, Form 1040-SS or self-employment tax payments to your local U.S. territory tax agency. Do not submit your Schedule SE, Form 1040-SS or self-employment tax payments to your local U.S. territory tax agency. Additional Medicare tax If you are required to pay Additional Medicare Tax on your self-employment income, attach Form 8959 to Form 1040 or Form 1040-SR, or Form 1040-SS. You cannot include the Additional Medicare Tax as a deductible part of your self-employment tax. Benefits of paying self-employment tax Your payments of self-employment tax contribute to your coverage under the U.S. social security system. Social security coverage provides you with old age, survivor, and disability benefits and hospital insurance. To receive credit for purposes of calculating your future social security benefits, payments must be received no later than three years, three months and 15 days after the year for which they apply – for example, payments for 2022 self-employment tax received after April 15, 2026, will not be credited to your account for purposes of calculating your future social security benefits. Figuring net self-employment income for self-employment tax Some of the deductions that are allowable when calculating net self-employment income for the territory may not be allowed when calculating net self-employment tax reported to the IRS. Please refer to the Form 1040-SS instructions for more information about the expenses allowed in determining net income from self-employment for U.S. self-employment tax purposes. Notary income Fees for services you provide as a notary public are not subject to self-employment tax. However, all of your other self-employment income is subject to self-employment tax. Example: X is a self-employed attorney and a notary public. Only the income that X received for services performed as a notary is not subject to self-employment tax. References/Related topics Persons employed in U.S. possessions – Federal Income tax Persons employed in U.S. possessions – Social Security tax (FICA) Persons employed in U.S. possessions – Unemployment tax (FUTA) Publication 570, Tax Guide for Individuals With Income From U.S. Possession Certain forms, instructions, and publications used by taxpayers in Puerto Rico have been replaced
