Form 8689 - Allocation Of Individual Income Tax To The U.s. Virgin Islands - 2016 Page 3
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Form 8689 (2017)
Page
Part I—Income From the U.S. Virgin Islands
Section references are to the Internal Revenue Code
unless otherwise noted.
(USVI)
Future Developments
Source of income. The rules for determining the source
of income are explained in sections 861 through 865 and
For the latest information about developments related to
937, Regulations section 1.937-2, and chapter 2 of Pub.
Form 8689 and its instructions, such as legislation
570. Some general rules are:
enacted after they were published, go to
• The source of wages, salaries, or tips is generally where
the services are performed. If you worked both in and
What’s New
outside the USVI, include on line 1 only wages, salaries,
At the time these instructions went to print, the tuition and
or tips earned while you were in the USVI. However,
fees deduction formerly claimed on line 27 had expired.
certain income earned while temporarily performing
You cannot claim the tuition and fees deduction on line
services in the USVI will not be considered USVI source
27 for expenses paid or incurred after 2016. Line 27 is
income. For details, see De minimis exception, later.
now shown as “Reserved for future use” in case
Military spouses. If you are the civilian spouse of a
Congress extends the deduction for 2017. To find out if
member of the U.S. Armed Forces, work in the USVI, and
legislation extended the deduction so you can claim it on
retain a residence or domicile in one of the 50 states, the
your 2017 return, go to IRS.gov/Extenders.
District of Columbia, or another U.S. territory, under the
Instructions
Military Spouses Residency Relief Act (MSRRA) your
wages, salaries, tips, and self-employment income will
Purpose of form. Use Form 8689 to figure the amount of
not be considered income from the USVI. Under MSRRA,
U.S. tax allocable to the U.S. Virgin Islands (USVI).
the military spouse must be in the USVI solely to be with
Who must file. If you were a U.S. citizen or resident alien
his/her servicemember spouse who is serving in
(other than a bona fide resident of the USVI) and had
compliance with military orders. For details on MSRRA,
income from sources in the USVI or income effectively
see Pub. 570.
connected with the conduct of a trade or business in the
• The source of interest income is generally where the
USVI, you may owe tax to the USVI. Your USVI tax
payer is located. For example, interest from a certificate
liability is a percentage of your U.S. tax liability.
of deposit issued by a USVI bank or a USVI branch of a
Do not use this form if you were a bona fide
▲
U.S. bank is USVI source income.
!
resident of the USVI during the entire tax year,
• Generally, dividends are sourced where the paying
or were considered a bona fide resident of the
corporation is created or organized.
CAUTION
USVI for the entire tax year under the special
• Taxable refunds, credits, or offsets of local USVI income
rules for the year of a move (see chapter 1 of Pub. 570,
taxes include only nonmirror code income taxes.
Tax Guide for Individuals With Income From U.S.
• Alimony received from a person who is a bona fide
Possessions).
resident of the USVI is USVI source income.
Joint returns. If you file jointly and only one spouse is
• Except as provided in regulations, income earned after
a bona fide resident of the USVI for the entire tax year,
December 31, 2004, that is from sources within the
the resident status for both spouses and subsequent tax
United States or effectively connected with the conduct
treatment is determined by the spouse with the higher
of a trade or business in the United States is not income
adjusted gross income (AGI) (disregarding community
from the USVI.
property laws). File Form 8689 only if the spouse with the
higher AGI is not a bona fide resident of the USVI for the
• The source of gains, profits, or income from the sale or
disposition of real property (and any interest in real
entire tax year.
property) is generally where the real property is located.
Where to file. You must file identical tax returns with the
Personal property. The source of income from the sale
United States and the USVI. If you are not enclosing a
of nondepreciable personal property is generally the seller’s
check or money order, file your original Form 1040
(including Form 8689) with the Department of the
residence. For example, if you are a bona fide resident of
the USVI, gain from the sale or disposition of personal
Treasury, Internal Revenue Service Center, Austin, TX
73301-0215 USA.
property is generally from sources within the USVI. Income
from the sale of inventory is generally sourced where the
If you are including a check or money order, file your
title to the property passes. See section 865 for details.
original return with the Internal Revenue Service, P.O. Box
1303, Charlotte, NC 28201-1303 USA.
De minimis exception. This is an exception to the
general rule for determining the source of income earned
File a signed copy of your Form 1040 (with all
in the USVI. Generally, income from the USVI does not
attachments, forms, and schedules, including Form 8689)
include compensation for services performed in the USVI
with the Virgin Islands Bureau of Internal Revenue, 6115
if during 2017 you:
Estate Smith Bay, St. Thomas, VI 00802. They will accept
• Were a U.S. citizen or resident;
a signed copy of your U.S. return and process it as an
original return.
• Were not a bona fide resident of the USVI;
Additional information. Pub. 570 has more information
• Were not employed by or under contract with an
and an example of how to complete Form 8689. To get
individual, partnership, or corporation that is engaged in a
Pub. 570, see How To Get Tax Help in the Instructions for
trade or business in the USVI;
Form 1040.
• Temporarily performed services in the USVI for 90 days
or less; and
• Earned $3,000 or less from such services.
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