Navigating employer and employee tax obligations is a critical component of operating compliantly in any jurisdiction. In American Samoa, the tax system shares similarities with the U.S. federal system but operates under its own unique regulations and administration by the American Samoa Government's Department of Treasury. Employers are responsible for withholding various taxes from employee wages and remitting both the withheld amounts and their own contributions to the appropriate authorities.
Understanding these requirements is essential for businesses employing individuals in the territory, ensuring accurate payroll processing, timely payments, and adherence to local tax laws. This includes obligations related to social security, Medicare, and local income tax withholding, as well as specific rules for reporting and compliance.
Employer Social Security and Payroll Tax Obligations
Employers in American Samoa are responsible for contributing to social security and Medicare on behalf of their employees, similar to the FICA tax system in the mainland U.S. These contributions are based on employee wages and are split between the employer and the employee.
- Social Security Tax: Both the employer and the employee contribute 6.2% each on wages up to an annual wage base limit. For 2025, this wage base limit is subject to change and is typically announced late in the preceding year.
- Medicare Tax: Both the employer and the employee contribute 1.45% each on all wages, with no wage base limit.
- Additional Medicare Tax: An additional 0.9% Medicare tax applies to employee wages exceeding a certain threshold ($200,000 for single filers, $250,000 for married filing jointly, $125,000 for married filing separately). This additional tax is only withheld from the employee's wages; the employer does not have a matching contribution for this portion.
Employers must calculate, withhold, and remit these taxes along with their own matching portions on a regular basis, typically quarterly, using forms similar to those used in the U.S.
Income Tax Withholding Requirements
Employers are required to withhold American Samoa income tax from their employees' wages based on the employee's declared filing status and the number of withholding allowances claimed on their Form ASET-W4 (American Samoa Employee's Withholding Allowance Certificate). The amount of tax to be withheld is determined using withholding tables provided by the American Samoa Government, which are based on the territory's income tax brackets.
American Samoa has its own progressive income tax rates. While specific brackets and rates for 2025 are subject to legislative confirmation, they are generally structured as follows (using 2024 rates as an example, which are expected to carry over unless changed):
| Tax Rate | Single Individuals & Married Filing Separately | Married Individuals Filing Jointly | Head of Household |
|---|---|---|---|
| 11% | Up to $5,000 | Up to $10,000 | Up to $7,500 |
| 17% | $5,001 to $20,000 | $10,001 to $40,000 | $7,501 to $30,000 |
| 28% | Over $20,000 | Over $40,000 | Over $30,000 |
Employers use these tables and the information from the employee's ASET-W4 to calculate the correct amount of income tax to withhold from each payroll.
Employee Tax Deductions and Allowances
Employees in American Samoa may be eligible for certain deductions and allowances that reduce their taxable income. These are similar to those available under the U.S. federal tax system.
- Standard Deduction: Taxpayers can claim a standard deduction amount based on their filing status, which reduces their adjusted gross income. The standard deduction amounts are subject to annual adjustments.
- Personal Exemptions: Taxpayers can claim personal exemptions for themselves, their spouse, and dependents. Each exemption reduces taxable income by a specific amount.
- Itemized Deductions: Alternatively, taxpayers may choose to itemize deductions if the total of their eligible expenses exceeds the standard deduction amount. Common itemized deductions can include medical expenses, certain taxes, home mortgage interest, and charitable contributions, subject to specific limitations and rules under American Samoa tax law.
While employers primarily focus on withholding based on allowances claimed on the ASET-W4, understanding these potential deductions helps employees accurately complete their withholding forms and file their annual tax returns.
Tax Compliance and Reporting Deadlines
Employers in American Samoa must adhere to specific deadlines for reporting wages, withholding taxes, and remitting payments. Key reporting requirements include:
- Quarterly Reporting: Employers typically file quarterly reports (similar to Form 941) detailing total wages paid, taxes withheld, and employer contributions for Social Security and Medicare. These reports and the associated tax payments are generally due by the last day of the month following the end of the quarter.
- Annual Reporting: By January 31st each year, employers must furnish employees with a Wage and Tax Statement (similar to Form W-2) summarizing their annual wages and taxes withheld. A copy of these W-2s, along with a summary form (similar to Form W-3), must be filed with the American Samoa Government by the end of February (or March if filing electronically).
- Annual Income Tax Returns: Employees are responsible for filing their own annual American Samoa income tax returns (Form AS-1040) by April 15th of the following year.
Timely filing and payment are crucial to avoid penalties and interest.
Special Tax Considerations for Foreign Workers and Companies
Foreign workers and companies operating in American Samoa may face specific tax considerations.
- Foreign Workers: The tax treatment of foreign workers depends on their residency status in American Samoa. Non-resident aliens are generally taxed only on income earned from sources within American Samoa. Specific withholding rules may apply, and they may not be eligible for the same deductions or allowances as residents. Tax treaties between the U.S. and other countries may also have implications, although their application to American Samoa can be complex.
- Foreign Companies: Foreign companies with a physical presence or conducting business activities in American Samoa may be subject to American Samoa corporate income tax on their effectively connected income. Establishing a legal entity and understanding the tax nexus rules are critical. Payroll obligations for employees working in American Samoa apply regardless of whether the employer is a local or foreign entity.
Navigating these complexities often requires careful consideration of individual circumstances and professional guidance to ensure full compliance with American Samoa tax laws.
