Form 8689 - Allocation Of Individual Income Tax To The U.s. Virgin Islands - 2016 Page 3
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Form 8689 (2016)
Page
Section references are to the Internal Revenue Code
• The source of wages, salaries, or tips is generally where
unless otherwise noted.
the services are performed. If you worked both in and
outside the USVI, include on line 1 only wages, salaries,
Future Developments
or tips earned while you were in the USVI. However,
For the latest information about developments related to
certain income earned while temporarily performing
Form 8689 and its instructions, such as legislation
services in the USVI will not be considered USVI source
enacted after they were published, go to
income. For details, see De minimis exception, later.
Military spouses. If you are the civilian spouse of a
Instructions
member of the U.S. Armed Forces, work in the USVI, and
retain a residence or domicile in one of the 50 states, the
Purpose of form. Use Form 8689 to figure the amount of
District of Columbia, or another U.S. territory, under the
U.S. tax allocable to the U.S. Virgin Islands (USVI).
Military Spouses Residency Relief Act (MSRRA) your
Who must file. If you were a U.S. citizen or resident alien
wages, salaries, tips, and self-employment income will
(other than a bona fide resident of the USVI) and had
not be considered income from the USVI. Under MSRRA,
income from sources in the USVI or income effectively
the military spouse must be in the USVI solely to be with
connected with the conduct of a trade or business in the
his/her servicemember spouse who is serving in
USVI, you may owe tax to the USVI. Your USVI tax
compliance with military orders. For details on MSRRA,
liability is a percentage of your U.S. tax liability.
see Pub. 570.
Do not use this form if you were a bona fide
▲
• The source of interest income is generally where the
!
resident of the USVI during the entire tax year,
payer is located. For example, interest from a certificate
or were considered a bona fide resident of the
of deposit issued by a USVI bank or a USVI branch of a
CAUTION
USVI for the entire tax year under the special
U.S. bank is USVI source income.
rules for the year of a move (see chapter 1 of Pub. 570,
• Generally, dividends are sourced where the paying
Tax Guide for Individuals With Income From U.S.
corporation is created or organized.
Possessions).
• Taxable refunds, credits, or offsets of local USVI income
Joint returns. If you file jointly and only one spouse is
taxes include only nonmirror code income taxes.
a bona fide resident of the USVI for the entire tax year,
• Alimony received from a person who is a bona fide
the resident status for both spouses and subsequent tax
resident of the USVI is USVI source income.
treatment is determined by the spouse with the higher
• Except as provided in regulations, income earned after
adjusted gross income (AGI) (disregarding community
December 31, 2004, that is from sources within the
property laws). File Form 8689 only if the spouse with the
United States or effectively connected with the conduct
higher AGI is not a bona fide resident of the USVI for the
of a trade or business in the United States is not income
entire tax year.
from the USVI.
Where to file. You must file identical tax returns with the
• The source of gains, profits, or income from the sale or
United States and the USVI. If you are not enclosing a
disposition of real property (and any interest in real
check or money order, file your original Form 1040
property) is generally where the real property is located.
(including Form 8689) with the Department of the
Personal property. The source of income from the sale
Treasury, Internal Revenue Service Center, Austin, TX
of nondepreciable personal property is generally the
73301-0215 USA.
seller’s residence. For example, if you are a bona fide
If you are including a check or money order, file your
resident of the USVI, gain from the sale or disposition of
original return with the Internal Revenue Service, P.O. Box
personal property is generally from sources within the
1303, Charlotte, NC 28201-1303 USA.
USVI. Income from the sale of inventory is generally
File a signed copy of your Form 1040 (with all
sourced where the title to the property passes. See
attachments, forms, and schedules, including Form 8689)
section 865 for details.
with the Virgin Islands Bureau of Internal Revenue, 6115
De minimis exception. This is an exception to the
Estate Smith Bay, St. Thomas, VI 00802. They will accept
general rule for determining the source of income earned
a signed copy of your U.S. return and process it as an
in the USVI. Generally, income from the USVI does not
original return.
include compensation for services performed in the USVI
Additional information. Pub. 570 has more information
if during 2016 you:
and an example of how to complete Form 8689. To get
• Were a U.S. citizen or resident,
Pub. 570, see How To Get Tax Help in the Instructions for
• Were not a bona fide resident of the USVI,
Form 1040.
• Were not employed by or under contract with an
Part I—Income From the U.S. Virgin Islands
individual, partnership, or corporation that is engaged in a
(USVI)
trade or business in the USVI,
Source of income. The rules for determining the source
• Temporarily performed services in the USVI for 90 days
of income are explained in sections 861 through 865 and
or less, and
937, Regulations section 1.937-2, and chapter 2 of Pub.
• Earned $3,000 or less from such services.
570. Some general rules are:
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