Tax question  

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Spartygrad95
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March 10, 2015 3:30 pm  

I lived on mainland for 183+ days of 2014 and was wondering if I need to fill out two tax returns. One for IRS and one with VI? Or can I do this is a better question? I don't want to file here if I don't have to because I would like my refund this decade. Thanks


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speee1dy
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March 10, 2015 3:37 pm  

gosh, i would call david johnson or the vibir and ask that question?

how come you dont want to wait until the next decade for your refund? makes no sense. lol


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Spartygrad95
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March 10, 2015 3:43 pm  

This makes me think I'm not a bona ride resident for 2014

"Per Section 937, an individual is generally considered a bona fide resident of a territory/possession if he or she (1) is physically present in the territory for 183 days during the taxable year, (2) does not have a tax home outside the territory during the tax year, and (3) does not have a closer connection to the U.S. or a foreign country. However, U.S. citizens and resident aliens are permitted certain exceptions to the 183-day rule."

I was not here 183 days plus owned a home in mainland until September.


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Alana33
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March 10, 2015 4:09 pm  

Call VIBIR or consult a tax accountant.


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OldTart
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March 10, 2015 4:11 pm  

I was not here 183 days plus owned a home in mainland until September.

Seems logical to me that you're free and clear this year to file stateside.


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Spartygrad95
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March 10, 2015 4:13 pm  

I have always done my own taxes. I guess I'll call VIBIR. not paying someone to do math. I'm quite capable. Just thought there was easy answer. Lol. Should have known better after 8 months here


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speee1dy
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March 10, 2015 4:53 pm  

easy answer? here?


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ChrisMI
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March 10, 2015 7:15 pm  

You are correct in that you are not a bona fide VI resident (183 days and closer connection to the USVI). If you had some income from the VI, and some from the States, you split your tax burden proportionate to your VI/state source percentages, filing a regular 1040 then adding for 8689, allocation of individual income tax to the US Virgin islands. If you worked for a stateside company and just lived in the VI part of the year you should be no different than someone who came to the VI for vacation. If your stateside employer paid you with a VI mailing address while you worked here I'm not sure if that gets counted toward the part that is broken out on 8689 or not -- check through the instructions on it. Was any money in withholding or estimated taxes paid into the BIR? I am not a tax accountant, so if someone who is thinks I'm wrong on part of this please say so. I split mine in 2013 using 8689 because I have a business in the states and a business in the USVI. For 2014 I am bona fide so all goes to the BIR except FICA and Medicare taxes.


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Spartygrad95
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March 10, 2015 8:15 pm  

Thanks Chris. I couldn't find any info on VIBIR site that said for sure or IRS. So, your understanding is I won't have to pay mainland federal taxes on salary here?


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Exit Zero
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March 10, 2015 9:22 pm  

So, your understanding is I won't have to pay mainland federal taxes on salary here?

The tax rate is the same - Federal taxes would be payable but stay here - Social Security and Medicare are sent to the Mainland either by you or your employer.
Whether your Federal tax on VI income for last year with a stateside tax domicile is separated out and paid to the BIR
This seems to indicate you would file 2 returns - here and mainland:

The V.I. tax liability for all other U.S. citizens or residents with V.I. income is computed a
fraction of the taxpayer’s tota
l liability, based on the ratio of
adjusted gross
income. Such
individuals must file sign
ed identical returns with
the United States and the
Virgin Islands by April
15 of the following year (assuming a cale
ndar year taxpayer), using IRS Form 8689
to figure out
what portion of their income tax must be paid to the Virgin Islands. This form must be attached
to both returns. The U.
S. return should be filed with the
IRS Center, Philadelphia, PA 19255, and
the V.I. return should be filed with the BIR in St
. Thomas. When this pro
cedure is followed, both
a taxpayer’s payments to the Virgin Islands and
V.I. employer withholdin
gs are credited against
his or her U.S. tax liability

That is from the BIR website:

http://www.vibir.gov/pdfs/Tax_%20Structure_%202015.pdf


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Spartygrad95
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March 10, 2015 9:27 pm  

So, your understanding is I won't have to pay mainland federal taxes on salary here?

The tax rate is the same - Federal taxes would be payable but stay here - Social Security and Medicare are sent to the Mainland either by you or your employer.
Whether your Federal tax on VI income for last year with a stateside tax domicile is separated out and paid to the BIR
This seems to indicate you would file 2 returns - here and mainland:

The V.I. tax liability for all other U.S. citizens or residents with V.I. income is computed a
fraction of the taxpayer’s tota
l liability, based on the ratio of
adjusted gross
income. Such
individuals must file sign
ed identical returns with
the United States and the
Virgin Islands by April
15 of the following year (assuming a cale
ndar year taxpayer), using IRS Form 8689
to figure out
what portion of their income tax must be paid to the Virgin Islands. This form must be attached
to both returns. The U.
S. return should be filed with the
IRS Center, Philadelphia, PA 19255, and
the V.I. return should be filed with the BIR in St
. Thomas. When this pro
cedure is followed, both
a taxpayer’s payments to the Virgin Islands and
V.I. employer withholdin
gs are credited against
his or her U.S. tax liability

That is from the BIR website:

http://www.vibir.gov/pdfs/Tax_%20Structure_%202015.pdf

Gracias


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rmb2830
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March 10, 2015 10:03 pm  

Make sure you save copies and get the VI ones stamped etc. I had one year with a W-2 VI, and stateside income, and did just what it says, filed full copies in both places. The IRS started coming after me to collect to the penny the amount of tax I had paid in the VI, that was due on my VI income. BIR gave me printouts showing what I had paid, but it got to the certified letter stage, possibly a year later, before I finally reached someone on the phone at the IRS who actually looked at the papers while we were on the phone, and figured out they were wrong (and then we had a conversation about how it was to live in the VI, where could she stay if she came for a vacation...).


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Spartygrad95
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March 10, 2015 10:15 pm  

Ok. Do I claim income made in Michigan and VI on both, or only VI for VIBIR and Michigan for IRS?


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ChrisMI
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March 10, 2015 11:40 pm  

Ok. Do I claim income made in Michigan and VI on both, or only VI for VIBIR and Michigan for IRS?

You have only one 1040 with all income, then you split it out on form 8689. You file one set with the IRS in Charlotte, NC (you have to mail it), and the other you bring TWO copies to the BIR office in Red Hook -- they stamp them both, one copy you keep, the other stays with them. Do not mail it to the Red Hook BIR office despite instructions saying you can mail it. Don't! Bring it in person ad leave with a stamped copy.

Don't forget you no longer pay anything to Michigan after moving. I took gains on several equities that year right after moving to avoid MI state tax on the gain.

Also did you file the official form 8898 and letter to the IRS in Bensalem, PA telling them you moved to a US territory? You need to have done this, or if not do it right now with the actual date you moved. If you do not do this the IRS will continue to look for the money they expect you to owe, and you will be on the 'stopped filing list' (the bad one).

See below:

Notifying the IRS about Residency in a U.S. Territory

If a taxpayer moves to or from a territory and has worldwide income of more than $75,000 that year, it is necessary to file Form 8898, Statement for Individuals Who Begin or End Bona Fide Residence in a U.S. Possession, with the Internal Revenue Service (IRS). If married, the $75,000 threshold applies to each spouse separately.
File Form 8898 by the due date (including extensions) for filing the Form 1040 or Form 1040NR. File this form by itself at the following address:

Internal Revenue Service center
P.O. Box 331 Drop Point S-607
Bensalem, PA 19020-8517

There may be a $1,000 penalty for not filing a required Form 8898 or for not providing all of the required information.


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JohnnyU
(@JohnnyU)
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Posts: 465
March 10, 2015 11:42 pm  

Make sure you save copies and get the VI ones stamped etc. I had one year with a W-2 VI, and stateside income, and did just what it says, filed full copies in both places. The IRS started coming after me to collect to the penny the amount of tax I had paid in the VI, that was due on my VI income. BIR gave me printouts showing what I had paid, but it got to the certified letter stage, possibly a year later, before I finally reached someone on the phone at the IRS who actually looked at the papers while we were on the phone, and figured out they were wrong (and then we had a conversation about how it was to live in the VI, where could she stay if she came for a vacation...).

+1

You have a high likelihood of getting flagged for a audit

Some/most of the IRS doesn't understand the tax code


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Spartygrad95
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Posts: 1885
March 11, 2015 12:40 pm  

VIBIR says I need to file 8898 form. This is in direct opposition to what info on website says. Neither my wife or I were bona fide residents. Zero help whatsoever at VIBIR. They also said I have to add my income from here to my 1040 form? So I'm getting double dipped? I'm about to not even file with VI and just efile 1040 form and deal with bs later.


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speee1dy
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March 11, 2015 2:11 pm  

just file in the states. might be so much easier. if they have a problem with it they will let you know eventually .

when i first moved down here i had no income here. did not move down in the first half of the year. filed in the states. was no problem.


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Spartygrad95
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March 11, 2015 2:18 pm  

I think I just need to attach 8689. Only problem is tax software programs do not have that form available so I have to mail my return to IRS. Isn't this the 21st century?


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speee1dy
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March 11, 2015 2:37 pm  

lol, not down here


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Spartygrad95
(@Spartygrad95)
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March 11, 2015 2:59 pm  

lol, not down here

Here I understand, but this is going to IRS with 1040. Thanks Obama


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speee1dy
(@speee1dy)
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March 11, 2015 4:18 pm  

more and more people are "thanking" him


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ernieandmaryjo
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Posts: 117
March 11, 2015 4:52 pm  

I moved here late in 2013, worked nine months in Colorado, the last three months of the year here on STX. Used online tax program Feb 2014, e-filed Colorado as part-year resident (got a wee small refund), printed 1040 and form 8689 (from IRS website) and filed by mail here, received wee small refund from GVI in July or August. Haven't heard from IRS.


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Spartygrad95
(@Spartygrad95)
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Posts: 1885
March 11, 2015 5:19 pm  

I moved here late in 2013, worked nine months in Colorado, the last three months of the year here on STX. Used online tax program Feb 2014, e-filed Colorado as part-year resident (got a wee small refund), printed 1040 and form 8689 (from IRS website) and filed by mail here, received wee small refund from GVI in July or August. Haven't heard from IRS.

That scares me. I'm due a pretty nice federal return


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ernieandmaryjo
(@ernieandmaryjo)
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Posts: 117
March 11, 2015 6:18 pm  

I just went back and looked at our 2013 return, I did not file form 8689, I just printed the 1040A and mailed it to VIBIR like I had been here the whole year.


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ChrisMI
(@ChrisMI)
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Posts: 213
March 11, 2015 7:38 pm  

So you filed two different tax returns, neither of which show your full year income? If so, I think you will be hearing from the IRS in a manner you may not prefer. Fixable, but you'l need to refile the correct way, putting all income on a single 1040 filed in both places with 8689.


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