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                                                                                                                        OMB No. 1545-0074
                                     Allocation of Individual Income Tax 
Form 8689                                               to the U.S. Virgin Islands 
Department of the Treasury                                Attach to Form 1040 or 1040-SR.                                2023
                                                                                                                         Attachment   
Internal Revenue Service              Go to www.irs.gov/Form8689 for the latest information.                             Sequence No. 869
Name(s) shown on Form 1040 or 1040-SR (your tax return)                                                             Your social security number 

Part I   Income From the U.S. Virgin Islands (USVI)
1    Wages, salaries, tips, etc.  . . .   .             . . . . . . . . . . .     .       .          . .  . . . . . . 1
2    Taxable interest .     . . . . . .   .             . . . . . . . . . . .     .       .          . .  . . . . . . 2
3    Ordinary dividends .     . . . . .   .             . . . . . . . . . . .     .       .          . .  . . . . . . 3 
4    Taxable refunds, credits, or offsets of local USVI income taxes  .   . .     .       .          . .  . . . . . . 4
5    Alimony received  .      . . . . .   .             . . . . . . . . . . .     .       .          . .  . . . . . . 5
6    Business income or (loss)    . . .   .             . . . . . . . . . . .     .       .          . .  . . . . . . 6
7    Capital gain or (loss)  .  . . . .   .             . . . . . . . . . . .     .       .          . .  . . . . . . 7 
8    Other gains or (losses)    . . . .   .             . . . . . . . . . . .     .       .          . .  . . . . . . 8
9    IRA distributions (taxable amount) . .             . . . . . . . . . . .     .       .          . .  . . . . . . 9
10   Pensions and annuities (taxable amount)              . . . . . . . . . .     .       .          . .  . . . . . . 10
11   Rental real estate, royalties, partnerships, S corporations, trusts, etc.  . .       .          . .  . . . . . . 11
12   Farm income or (loss)  .   . . . .   .             . . . . . . . . . . .     .       .          . .  . . . . . . 12 
13   Unemployment compensation  .     .   .             . . . . . . . . . . .     .       .          . .  . . . . . . 13
14   Social security benefits (taxable amount)            . . . . . . . . . .     .       .          . .  . . . . . . 14 
15   Other income. List type and amount                                                                               15
16   Add lines 1 through 15. This is your total USVI income         . . . . .     .       .          . .  . . . . . . 16
Part II  Adjusted Gross Income From the USVI
17   Educator expenses        . . . . .   .             . . . . . . . . . . .     .       .            17 
18   Certain business expenses of reservists, performing artists, and fee-basis government officials   18
19   Health savings account deduction     .             . . . . . . . . . . .     .       .            19
20   Moving expenses for members of the armed forces  .           . . . . . .     .       .            20
21   Deductible part of self-employment tax  .            . . . . . . . . . .     .       .            21
22   Self-employed SEP, SIMPLE, and qualified plans .           . . . . . . .     .       .            22
23   Self-employed health insurance deduction  .            . . . . . . . . .     .       .            23
24   Penalty on early withdrawal of savings  .            . . . . . . . . . .     .       .            24 
25   IRA deduction  .       . . . . . .   .             . . . . . . . . . . .     .       .            25
26   Student loan interest deduction  .   .             . . . . . . . . . . .     .       .            26
27   Reserved for future use    . . . .   .             . . . . . . . . . . .     .       .            27
28   Reserved for future use    . . . .   .             . . . . . . . . . . .     .       .            28
29   Add lines 17 through 28  .   . . .   .             . . . . . . . . . . .     .       .          . .  . . . . . . 29
30   Subtract line 29 from line 16. This is your USVI adjusted gross income       .       .          . .  . . . . . . 30
Part III Allocation of Tax to the USVI
31   Enter the amount from the total tax line on your tax return      . . . .     .       .          . .  . . . . . . 31
32   Enter total of certain amounts from your tax return. See instructions on page 4 for amount to enter .        . . 32
33   Subtract line 32 from line 31  . .   .             . . . . . . . . . . .     .       .          . .  . . . . . . 33
34   Enter the amount from the adjusted gross income line on your tax return              .            34
35   Divide line 30 above by line 34. Enter the result as a decimal (rounded to at least 3 places). Do not 
     enter more than 1.000      . . . .   .             . . . . . . . . . . .     .       .          . .  . . . . . . 35 .
36   Multiply line 33 by line 35. This is your tax allocated to the USVI  . .     .       .          . .  . . . . . . 36
Part IV  Payments of Income Tax to the USVI
37   Income tax withheld by the USVI  .   .             . . . . . . . . . . .     .       .            37
38   2023 estimated tax payments and amount applied from 2022 return        .     .       .            38
39   Amount paid with Form 4868 (extension request) .           . . . . . . .     .       .            39
40   Add lines 37 through 39. These are your total payments to the USVI     .     .       .          . .  . . . . . . 40
41   Enter the smaller of line 36 or line 40. Add this amount to the total payments line of your tax return. 
     On the dotted line next to it, enter “Form 8689” and show this amount .      .       .          . .  . . . . . . 41
42   Overpayment to the USVI. If line 40 is more than line 36, subtract line 36 from line 40                . . . . . 42
43   Amount of line 42 you want refunded to you             . . . . . . . . .     .       .          . .  . . . . . . 43
44   Amount of line 42 you want applied to your 2024 estimated tax        . .     .       .            44
45   Amount you owe to the USVI. If line 40 is less than line 36, subtract line 40 from line 36 .             . . . . 45
46   Enter the amount from line 45 that you will pay when you file your income tax return. Add this amount 
     to the total payments line of your tax return. On the dotted line next to it, enter “Form 8689” and 
     show this amount  .      . . . . .   .             . . . . . . . . . . .     .       .          . .  . . . . . . 46
For Paperwork Reduction Act Notice, see your tax return instructions.                       Cat. No. 64603D              Form 8689 (2023)

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Form 8689 (2023) Page 3

Section references are to the Internal Revenue Code Part I—Income From the U.S. Virgin Islands
unless otherwise noted. (USVI)
Future Developments Source of income. The rules for determining the source
For the latest information about developments related to of income are explained in sections 861 through 865 and
Form 8689 and its instructions, such as legislation 937, Regulations section 1.937-2, and chapter 2 of Pub.
enacted after they were published, go to 570. Some general rules are:
www.irs.gov/Form8689. • The source of wages, salaries, or tips is generally where
the services are performed. If you worked both in and
Instructions outside the USVI, include on line 1 only wages, salaries,
Purpose of form. Use Form 8689 to figure the amount of or tips earned while you were in the USVI. However,
U.S. tax allocable to the U.S. Virgin Islands (USVI). certain income earned while temporarily performing
Who must file. If you were a U.S. citizen or resident alien services in the USVI will not be considered USVI source
(other than a bona fide resident of the USVI) and had income. For details, see De minimis exception, later .
income from sources in the USVI or income effectively Active duty U.S. Armed Forces. If you are a bona fide
connected with the conduct of a trade or business in the resident of the USVI and are stationed outside of the
USVI, you may owe tax to the USVI. Your USVI tax USVI, your military compensation will be sourced in the
liability is a percentage of your U.S. tax liability. USVI under the Servicemembers Civil Relief Act (SCRA). If
Do not use this form if you were a bona fide you are not a bona fide resident of the USVI but are
resident of the USVI during the entire tax year, stationed in the USVI, however, your military
▲! or were considered a bona fide resident of the compensation will not be sourced there. For further
CAUTION details, see Pub. 570.
USVI for the entire tax year under the special
rules for the year of a move (see chapter 1 of Pub. 570, Military spouses. If you are the civilian spouse of a
Tax Guide for Individuals With Income From U.S. member of the U.S. Armed Forces, work in the USVI, and
Territories). retain a residence or domicile in one of the 50 states, the
Joint returns. If you file jointly and only one spouse is District of Columbia, or another U.S. territory, under the
a bona fide resident of the USVI for the entire tax year, Military Spouses Residency Relief Act (MSRRA) your
the resident status for both spouses and subsequent tax wages, salaries, tips, and self-employment income will
treatment is determined by the spouse with the higher not be considered income from the USVI. Under MSRRA,
adjusted gross income (AGI) (disregarding community the military spouse must be in the USVI solely to be with
property laws). File Form 8689 only if the spouse with the their servicemember spouse who is serving in compliance
higher AGI is not a bona fide resident of the USVI for the with military orders. For details on MSRRA, see Pub. 570.
entire tax year. • The source of interest income is generally where the
Where to file. You must file identical tax returns with the payer is located. For example, interest from a certificate
United States and the USVI. If you are not enclosing a of deposit issued by a USVI bank or a USVI branch of a
check or money order, file your original tax return U.S. bank is USVI source income.
(including Form 8689) with the Department of the • Generally, dividends are sourced where the paying
Treasury, Internal Revenue Service, Austin, TX corporation is created or organized.
73301-0215 USA. • Taxable refunds, credits, or offsets of local USVI income
If you are including a check or money order, file your taxes include only nonmirror code income taxes.
original return with the Internal Revenue Service, P.O. Box • Alimony received from a person who is a bona fide
1303, Charlotte, NC 28201-1303 USA. resident of the USVI is USVI source income.
File a signed copy of your tax return (with all • Except as provided in regulations, income that is from
attachments, forms, and schedules, including Form 8689) sources within the United States or effectively connected
with the Virgin Islands Bureau of Internal Revenue, 6115 with the conduct of a trade or business in the United
Estate Smith Bay, Suite 225, St. Thomas, VI 00802. They States is not income from the USVI.
will accept a signed copy of your U.S. return and process • The source of gains, profits, or income from the sale or
it as an original return. disposition of real property (and any interest in real
Amended returns. You can e-file Form 1040-X, property) is generally where the real property is located.
Amended U.S. Individual Income Tax Return, using tax Personal property. The source of income from the sale
filing software. Go to www.irs.gov/Filing/Amended- of nondepreciable personal property is generally the
Return-Frequently-Asked-Questions for more information. seller’s residence. For example, if you are a U.S. citizen or
Or, you can send your paper Form 1040-X to the IRS at resident alien and not a bona fide resident of the USVI,
the address in the Instructions for Form 1040-X. Send gain from the sale or disposition of personal property is
your Form 1040-X to the USVI at the address for the generally treated as U.S. source. Income from the sale of
Virgin Islands Bureau of Internal Revenue under Where to inventory is generally sourced where the title to the
file , earlier. property passes. However, in some cases, such as when
Additional information. See Pub. 570, available at the taxpayer produces or purchases the inventory within
www.irs.gov/Pub570. a U.S. territory, and then sells the inventory within the
United States, source is based on allocation. See section
865 for details.

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Form 8689 (2023) Page 4

De minimis exception. This is an exception to the Schedule 2 (Form 1040).
general rule for determining the source of income earned • Self-employment tax;
in the USVI. Generally, income from the USVI does not • Social security and Medicare tax on unreported tip
include compensation for services performed in the USVI income;
if during 2023 you:
• Uncollected social security and Medicare tax on wages;
• Were a U.S. citizen or resident;
• Household employment tax;
• Were not a bona fide resident of the USVI;
• Uncollected social security and Medicare or RRTA tax
• Were not employed by or under contract with an on tips or group-term life insurance from Form W-2, box
individual, partnership, or corporation that is engaged in a 12;
trade or business in the USVI;
• Tax on excess golden parachute payments;
• Temporarily performed services in the USVI for 90 days
or less; and • Excise tax on insider stock compensation from an
expatriated corporation; and
• Earned $3,000 or less from such services.
• Additional tax on excess contributions or accumulation
Part II—Adjusted Gross Income From the from Form 5329.
USVI Schedule 3 (Form 1040).
Lines 21 through 23. If you had USVI source self- • Health coverage tax credit from Form 8885;
employment income, figure the amount to enter on each • Credit for repayment of amounts included in income
line by (1) dividing your USVI source self-employment from earlier years;
income by your total (worldwide) self-employment
income, and (2) multiplying the total amount of each • Net section 965 liability remaining to be paid in future
deduction that applies to you by the result in (1). years; and
Line 24. Enter the amount of penalty on early withdrawals • Other payments or refundable credits reported on line
from savings accounts in USVI banks or USVI branches 13z.
of U.S. banks. The Form 1099-INT or Form 1099-OID you Part IV—Payments of Income Tax to the USVI
received will show the amount of any penalty you were Amounts overpaid to the United States will generally not
charged. be applied to the amount you owe to the USVI. Similarly,
Line 25. Enter the total of your and your spouse’s IRA amounts overpaid to the USVI will not be applied to the
deductions attributable to USVI compensation or earned amount you owe to the United States.
income. Figure the amount to report on line 25 by (1) Line 46. Enter the amount you owe to the USVI that you
dividing your USVI compensation or earned income by will pay when you file your income tax return.
your total (worldwide) compensation or earned income,
Credit for U.S. tax paid to the USVI. You can take a
and (2) multiplying the amount of your IRA deduction by
credit on your U.S. return for the U.S. tax allocated to the
the result in (1). Figure the amount of your spouse’s IRA USVI only if you actually paid the tax to the USVI. To take
deduction the same way.
the credit, you must complete Form 8689 and attach it to
Line 29. Include in the total on line 29 the amount of any your Form 1040 or 1040-SR. Add line 41 and line 46 of
other deductions included on the Archer MSA deduction Form 8689 and include the amount in the total on Form
line and the Total other adjustments line of Schedule 1 1040 or 1040-SR, Total payments line. On the dotted line
(Form 1040) that are attributable to your USVI income. On next to it, enter “Form 8689” and the amount paid.
the dotted line next to line 29, enter the name and amount
of each deduction attributable to your USVI income. On Penalty for Failure To Furnish Information
line 29, enter the total amount of deductions attributable If you became or ceased to be a bona fide resident of a
to your USVI income. If you or your spouse had an Archer U.S. territory, you may be required to file Form 8898,
MSA deduction on Schedule 1 (Form 1040), figure the Statement for Individuals Who Begin or End Bona Fide
amount to report on line 29 the same way you would an Residence in a U.S. Possession. If you fail to provide the
IRA deduction (see Line 25 above). required information, you may have to pay a $1,000
Line 30. This amount is your adjusted gross income. penalty for each failure unless you can show the failure
Line 32. Enter the total of the amounts from: was due to reasonable cause and not willful neglect. This
penalty is in addition to any criminal penalty provided by
Form 1040. law. For details, see the Instructions for Form 8898.
• Earned income credit (EIC);
• Refundable child tax credit or additional child tax credit;
and
• American opportunity credit.

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