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The amount of tax you must pay to the Virgin

be liable for Puerto Rican taxes. You may also

sources and income from all other sources to

Islands is figured as follows:

be liable for filing a U.S. tax return.

find the part that you can deduct on your U.S. tax

return. Examples of deductions that do not spe-

Requests for information about the fil-

Total tax on U.S.

cifically apply to a particular type of income are

ing of Puerto Rican tax returns should

return

V.I. AGI

alimony payments, the standard deduction, and

be addressed to:

(after certain

Worldwide AGI

certain itemized deductions (such as medical

adjustments)

expenses, charitable contributions, and real es-

Departamento de Hacienda

tate taxes and mortgage interest on your home).

Negociado de Asistencia

Form 8689.

Use Form 8689 to make this

To find the part of a deduction that is allowa-

Contributiva y Legislac´ ı on

computation. You must complete this form and

ble, multiply the deduction by the following frac-

P.O. Box 9024140

attach it to each copy of your return. You should

tion.

San Juan, Puerto Rico 00902 – 4140

pay any tax due to the Virgin Islands when you

file your return with the Virgin Islands Bureau of

Gross income subject

The telephone number is (787)

Internal Revenue. You receive credit for taxes

to U.S. tax

721 – 2020, extension 3611. To obtain

paid to the Virgin Islands by including the

Gross income from all sources

Puerto Rican tax forms, contact the

amount on Form 8689, line 38, in the total on

(including exempt Puerto Rican income)

Forms and Publications Division Office at the

Form 1040, line 68. On the dotted line next to

above address or call (787) 721 – 2020, exten-

line 68, enter “Form 8689” and show the

Example. You and your spouse are both

sions 2645 or 2646.

amount.

under 65 and U.S. citizens who are bona fide

See the illustrated example at the end of this

You can also access the Puerto Rican

residents of Puerto Rico for the entire year. You

publication.

web site at

file a joint income tax return. During 2003, you

earned $15,000 from Puerto Rican sources and

Where to file. If you are not a bona fide resi-

your spouse earned $25,000 from the U.S. Gov-

dent of the Virgin Islands, but you have income

Residents of Puerto Rico. If you are a U.S.

ernment. You have $16,000 of itemized deduc-

from the Virgin Islands, you must file Form 1040

citizen and also a resident of the Common-

tions that do not apply to any specific type of

and all attachments with the Internal Revenue

wealth of Puerto Rico for the entire tax year, you

income. These are medical expenses of $4,000,

Service Center, Philadelphia, PA 19255 – 0215,

generally must include income from worldwide

real estate taxes of $5,000, home mortgage

and with the Virgin Islands Bureau of Internal

sources on your Puerto Rican return. Wages

interest of $6,000, and charitable contributions

Revenue.

and cost-of-living allowances paid by the U.S.

of $1,000 (cash contributions). You determine

Government for working in Puerto Rico are sub-

the amount of each deduction that you can claim

If you are a bona fide resident of the

ject to Puerto Rican tax. However, cost-of-living

on your Schedule A (Form 1040), by multiplying

Virgin Islands, you should file your re-

allowances paid by the U.S. government are

the deduction by the following fraction:

turn with:

exempt from Puerto Rican tax if you meet cer-

tain requirements. Advice about possible tax

Gross income subject

Virgin Islands Bureau of Internal Revenue

benefits under the Puerto Rican investment in-

to U.S. tax

9601 Estate Thomas

centive programs is available from the Puerto

Gross income from all sources

Charlotte Amalie

(including exempt Puerto Rican income)

Rican tax authorities. If you report U.S. source

St. Thomas, U.S. Virgin Islands 00802

income on your Puerto Rican tax return, you can

claim a credit against your Puerto Rican tax, up

SCHEDULE A (Form 1040) –

Itemized de-

to the amount allowable, for income taxes paid

Contact that office for information about filing

ductions should be modified as shown below:

to the United States.

your Virgin Islands tax return.

Medical Expenses

Nonresidents of Puerto Rico. If you are a

Extensions of time to file. You can get an

U.S. citizen and are not a resident of Puerto

$2,500

$25,000

automatic 4-month extension of time to file your

$4,000

(enter on line 1

Rico, include only your income from Puerto Ri-

$40,000

of Schedule A)

tax return. See Extensions of time to file under

can sources on your Puerto Rican return.

Filing U.S. Tax Returns, earlier. Bona fide re-

Wages for services performed in Puerto Rico for

Real Estate Taxes

sidents of the Virgin Islands must file paper

the U.S. Government or for private employers is

Form 4868 with the Virgin Islands Bureau of

income from Puerto Rican sources.

$3,125

Internal Revenue. Non-Virgin Islands residents

$25,000

U.S. taxation. As a U.S. citizen, you must re-

$5,000 =

(enter on line 6

should file separate extension requests with the

$40,000

port gross income from worldwide sources, re-

of Schedule A)

IRS and the Virgin Islands Bureau of Internal

gardless of where you live. However, a special

Revenue and make any payments due to the

rule applies if you are a bona fide resident of

Home Mortgage Interest

respective jurisdictions. However, the Virgin Is-

Puerto Rico for an entire tax year, or have been

lands Bureau of Internal Revenue will honor an

$3,750

a bona fide resident of Puerto Rico for at least 2

extension request that was timely filed with the

$25,000

(enter on line 10

years and later change your residence from

$6,000 =

IRS.

$40,000

or 11 of Schedule

Puerto Rico during a tax year.

If you need more time after filing Form 4868,

Income. Under the special rule, income you

file Form 2688. For more information, see the

receive from Puerto Rican sources during your

Form 2688 instructions.

Charitable Contributions (cash contribu-

residence in Puerto Rico is exempt from U.S.

tions)

tax. This includes income for the period of

Double taxation. A mutual agreement proce-

Puerto Rican residence in the year you change

$625

dure exists to settle cases of double taxation

$25,000

your residence from Puerto Rico if you resided

$1,000 =

(enter on line 15

between the United States and the Virgin Is-

$40,000

there at least 2 years before the change. How-

of Schedule A)

lands. See Double Taxation under Filing U.S.

ever, income you receive for services performed

Tax Returns, earlier.

Enter on Schedule A (Form 1040) only the

in Puerto Rico as an employee of the United

allowable portion of each deduction.

States is not exempt from U.S. income tax.

The Commonwealth

Personal exemptions are allowed in full

of Puerto Rico

Deductions and credits. Deductions and

and need not be divided. However, they may be

credits that specifically apply to your exempt

phased out depending upon your adjusted gross

The Commonwealth of Puerto Rico has its own

Puerto Rican income are not allowable on your

income and filing status.

separate and independent tax system. Although

U.S. income tax return.

it is modeled after the U.S. system, there are

Deductions that do not specifically apply to

Standard deduction. The standard deduc-

differences in law and tax rates. If you are a U.S.

any particular type of income must be divided

tion does not specifically apply to any particular

citizen with income from Puerto Rico, you may

between your income from Puerto Rican

type of income. To find the amount you can

Page 8

Publication 570 - Tax Guide For Individuals With Income From U.s. Possessions - 2003 Page 8

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