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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.                             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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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. 



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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.






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