Publication 570 - Tax Guide For Individuals With Income From U.s. Possessions - 2003 Page 10
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15the income and expenses from their Virgin Is-
is entered on line 2 and the net rental income of
on line 30 to find the amount of tax allocated to
lands rental property (Schedule E, Form 1040).
$6,200 ($14,400 of rental income minus $8,200
the Virgin Islands (line 33).
The Smiths also complete Form 8689 to de-
of rental expenses) is entered on line 11. The
Part IV. Part IV is used to show payments of
termine how much of their U.S. tax shown on
Smiths’ total Virgin Islands income of $6,700 is
income tax to the Virgin Islands only. The Smiths
line 60 of Form 1040 (with certain adjustments)
entered on line 16.
had no tax withheld by the Virgin Islands, but
is due to the Virgin Islands. This is the amount
Part II. The Smiths have no adjustments to
made estimated tax payments to the Virgin Is-
the Smiths must pay to the Virgin Islands.
their Virgin Islands income, so they enter zero
lands of $600, which are shown on lines 35 and
The Smiths file their Form 1040, attaching
( – 0 – ) on line 26, and $6,700 on line 27. Their
37. The Smiths include this amount ($600) in the
Form 8689 and all other schedules, with the
Virgin Islands adjusted gross income is $6,700.
total on Form 1040, line 68. On the dotted line
Internal Revenue Service.
Part III. On line 28, the Smiths enter the
next to line 68, they print “Form 8689” and show
At the same time, they send a copy of their
amount from line 60, Form 1040 ($5,199). They
the amount. The Smiths do not complete Form
Form 1040 with all schedules, including Form
leave line 29 blank and put this same amount on
1116. The income tax the Smiths owe to the
8689, to the Virgin Islands Bureau of Internal
line 30.
Virgin Islands ($34) is shown on line 42. They
Revenue. This copy will be processed as their
The Smiths enter their worldwide adjusted
must pay their Virgin Islands tax at the same
original Virgin Islands return.
gross income, $54,901, (line 35, Form 1040) on
time they file the copy of their return with the
line 31. They divide their Virgin Islands adjusted
Virgin Islands.
Completing Form 8689. Gerald and Lily enter
gross income, $6,700 (from line 27), by line 31.
their names and Gerald’s social security number
They multiply this decimal, .122, by the amount
at the top of the form.
Part I. The Smiths enter their income from
the Virgin Islands in Part I. The interest income
Page 10
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