Enlarge image | 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. 2021 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 2021 estimated tax payments and amount applied from 2020 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 2022 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 (2021) |
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Enlarge image | Form 8689 (2021) Page 3 Section references are to the Internal Revenue Code Additional information. Pub. 570 has more information unless otherwise noted. and an example of how to complete Form 8689. To get Pub. 570, see How To Get Tax Help in the Instructions for Future Developments Form 1040. For the latest information about developments related to Form 8689 and its instructions, such as legislation Part I—Income From the U.S. Virgin Islands enacted after they were published, go to (USVI) www.irs.gov/Form8689. Source of income. The rules for determining the source What’s New of income are explained in sections 861 through 865 and 937, Regulations section 1.937-2, and chapter 2 of Pub. For tax year 2021, the tuition and fees deduction has 570. Some general rules are: been repealed and the charitable contributions deduction is no longer an adjustment to income. See the • The source of wages, salaries, or tips is generally where Instructions for Form 1040 for more information on the services are performed. If you worked both in and deducting charitable contributions. outside the USVI, include on line 1 only wages, salaries, or tips earned while you were in the USVI. However, Instructions certain income earned while temporarily performing Purpose of form. Use Form 8689 to figure the amount of services in the USVI will not be considered USVI source U.S. tax allocable to the U.S. Virgin Islands (USVI). income. For details, see De minimis exception, later . Who must file. If you were a U.S. citizen or resident alien Active duty U.S. Armed Forces. If you are a bona fide (other than a bona fide resident of the USVI) and had resident of the USVI and are stationed outside of the income from sources in the USVI or income effectively USVI, your military compensation will be sourced in the connected with the conduct of a trade or business in the USVI under the Servicemembers Civil Relief Act (SCRA). If USVI, you may owe tax to the USVI. Your USVI tax you are not a bona fide resident of the USVI but are liability is a percentage of your U.S. tax liability. stationed in the USVI, however, your military compensation will not be sourced there. For further Do not use this form if you were a bona fide details, see Pub. 570. resident of the USVI during the entire tax year, ▲! or were considered a bona fide resident of the Military spouses.If you are the civilian spouse of a CAUTION member of the U.S. Armed Forces, work in the USVI, and USVI for the entire tax year under the special rules for the year of a move (see chapter 1 of Pub. 570, retain a residence or domicile in one of the 50 states, the Tax Guide for Individuals With Income From U.S. District of Columbia, or another U.S. territory, under the Possessions). Military Spouses Residency Relief Act (MSRRA) your wages, salaries, tips, and self-employment income will not Joint returns. If you file jointly and only one spouse is be considered income from the USVI. Under MSRRA, the a bona fide resident of the USVI for the entire tax year, military spouse must be in the USVI solely to be with his/ the resident status for both spouses and subsequent tax her servicemember spouse who is serving in compliance treatment is determined by the spouse with the higher with military orders. For details on MSRRA, see Pub. 570. adjusted gross income (AGI) (disregarding community property laws). File Form 8689 only if the spouse with the • The source of interest income is generally where the higher AGI is not a bona fide resident of the USVI for the payer is located. For example, interest from a certificate entire tax year. of deposit issued by a USVI bank or a USVI branch of a U.S. bank is USVI source income. Where to file. You must file identical tax returns with the United States and the USVI. If you are not enclosing a • Generally, dividends are sourced where the paying check or money order, file your original tax return corporation is created or organized. (including Form 8689) with the Department of the • Taxable refunds, credits, or offsets of local USVI income Treasury, Internal Revenue Service Center, Austin, TX taxes include only nonmirror code income taxes. 73301-0215 USA. • Alimony received from a person who is a bona fide If you are including a check or money order, file your resident of the USVI is USVI source income. original return with the Internal Revenue Service, P.O. Box • Except as provided in regulations, income that is from 1303, Charlotte, NC 28201-1303 USA. sources within the United States or effectively connected File a signed copy of your tax return (with all with the conduct of a trade or business in the United attachments, forms, and schedules, including Form 8689) States is not income from the USVI. with the Virgin Islands Bureau of Internal Revenue, 6115 • The source of gains, profits, or income from the sale or Estate Smith Bay, Suite 225, St. Thomas, VI 00802. They disposition of real property (and any interest in real will accept a signed copy of your U.S. return and process property) is generally where the real property is located. it as an original return. Personal property. The source of income from the sale Amended returns. Send your Form 1040-X to the IRS at of nondepreciable personal property is generally the seller’s the address in the Instructions for Form 1040-X. Send residence. For example, if you are a bona fide resident of your Form 1040-X to the USVI at the address for the the USVI, gain from the sale or disposition of personal Virgin Islands Bureau of Internal Revenue under Where to property is generally from sources within the USVI. Income file, earlier. from the sale of inventory is generally sourced where the title to the property passes. See section 865 for details. |
Enlarge image | Form 8689 (2021) 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 2021 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 • Excise tax on insider stock compensation from an or less; and 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 • Net section 965 liability remaining to be paid in future income, and (2) multiplying the total amount of each years; and deduction that applies to you by the result in (1). • Other payments or refundable credits reported on line Line 24. Enter the amount of penalty on early withdrawals 13z. from savings accounts in USVI banks or USVI branches of U.S. banks. The Form 1099-INT or Form 1099-OID you Part IV—Payments of Income Tax to the received will show the amount of any penalty you were USVI charged. Amounts overpaid to the United States will generally not Line 25. Enter the total of your and your spouse’s IRA be applied to the amount you owe to the USVI. Similarly, deductions attributable to USVI compensation or earned amounts overpaid to the USVI will not be applied to the income. Figure the amount to report on line 25 by (1) amount you owe to the United States. dividing your USVI compensation or earned income by Line 46. Enter the amount you owe to the USVI that you your total (worldwide) compensation or earned income, will pay when you file your income tax return. and (2) multiplying the amount of your IRA deduction by Credit for U.S. tax paid to the USVI. You can take a the result in (1). Figure the amount of your spouse’s IRA credit on your U.S. return for the U.S. tax allocated to the deduction the same way. USVI only if you actually paid the tax to the USVI. To take Line 29. Include in the total on line 29 the amount of any the credit, you must complete Form 8689 and attach it to other deductions included on the Archer MSA deduction your Form 1040 or 1040-SR. Add line 41 and line 46 of line and the Total other adjustments line of Schedule 1 Form 8689 and include the amount in the total on Form (Form 1040), that are attributable to your USVI income. On 1040 or 1040-SR, Total payments line. On the dotted line the dotted line next to line 29, enter the name and amount next to it, enter “Form 8689” and the amount paid. of each deduction attributable to your USVI income. On line 29, enter the total amount of deductions attributable to Penalty for Failure To Furnish Information your USVI income. If you or your spouse had an Archer If you became or ceased to be a bona fide resident of a MSA deduction on Schedule 1 (Form 1040), figure the U.S. possession, you may be required to file Form 8898, amount to report on line 29 the same way you would an Statement for Individuals Who Begin or End Bona Fide IRA deduction (seeLine 25above). Residence in a U.S. Possession. If you fail to provide the Line 30. This amount is your adjusted gross income. required information, you may have to pay a $1,000 Line 32. Enter the total of the amounts from: penalty for each failure unless you can show the failure was due to reasonable cause and not willful neglect. This Form 1040. penalty is in addition to any criminal penalty provided by • Earned income credit (EIC); law. For details, see the Instructions for Form 8898. • Refundable child tax credit or additional child tax credit; and • American opportunity credit. |