American Samoa Income Tax and Military Pay

American Samoa's income tax is the United States income tax, adopted as territorial law. The mechanism is unusual enough that a veteran should understand it before asking whether a particular kind of military income is taxed. Code section 11.0403(a): the income tax and income tax rules in force in the United States "in effect on December 31, 2000, where not clearly inapplicable or incompatible with the intent of this section, are adopted by American Samoa, and shall be deemed to impose a separate Territorial income tax, payable to the government." Section 11.0401 says to read the adopted provisions substituting American Samoa for United States and the Treasurer of American Samoa for the Secretary and the Commissioner of Internal Revenue. Together with chapter 5 of the title, which is a fixed list of local amendments rather than a rolling conformity rule, this is known as the Samoan Income Tax Act. Section 11.0403(c) provides that where the Internal Revenue Code as adopted conflicts with chapter 11.05, chapter 11.05 controls. The date is the point. American Samoa's income tax is frozen at the Internal Revenue Code of December 31, 2000, as locally amended. That has two consequences for veterans. What carries over cleanly: the exclusion for amounts received as a pension, annuity, or similar allowance for personal injuries or sickness resulting from active service in the armed forces, at Internal Revenue Code section 104(a)(4), was in the 2000 code. VA disability compensation and Dependency and Indemnity Compensation are not taxable income in American Samoa. Neither is a VA pension. The combat zone compensation exclusion at section 112 was also in the 2000 code. What does not carry over automatically: every federal military tax provision enacted after December 31, 2000. That list includes the Military Family Tax Relief Act of 2003, which let a service member on qualified official extended duty suspend the five-year ownership and use period for the home sale gain exclusion and created the above-the-line deduction for reservist travel; the combat pay election for the earned income credit; the 2008 HEART Act provisions on differential wage payments; and the 2016 law providing refunds of tax withheld from combat-injured veterans' disability severance pay. None of these were in the code American Samoa adopted, and unless chapter 11.05 or a later Fono act picked them up, they are not part of Samoan income tax law. Do not assume a federal military tax break you have read about applies here. Military retired pay is taxable. It is ordinary income under the adopted code and American Samoa has enacted no exemption or exclusion for it, unlike many states in this catalog. The Army benefits library reaches the same conclusion, and also records active duty pay and Survivor Benefit Plan annuities as taxable. The wage tax is separate and additional. Code section 11.0607, enacted in 2012, taxes all wages earned in the Territory at two percent, "in addition to American Samoa's income tax," paid by the wage earner and reported on the wage earner's return, with minimum withholding raised from four to six percent. It reaches wages earned in the territory, which on its face does not describe VA compensation or military retired pay, but a veteran working a civilian job in American Samoa pays it on that paycheck. The proceeds are earmarked, half to LBJ Tropical Medical Center operations and half to a special account supporting the Off-Island Medical Referral Program. Filing is with the ASG Tax Office, part of the Department of the Treasury, on Form 390, the American Samoa individual income tax return. This entry describes how the system is built, not what your return should say. A veteran with military retired pay, a VA award, and a civilian wage in American Samoa is dealing with a frozen mirror code and should get the answer from the ASG Tax Office in writing for the year being filed.