Tax question  

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Spartygrad95
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March 11, 2015 8:39 pm  

Chris so you say I have to claim monies made here on my 1040? How am I responsible for taxes in both places?


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ChrisMI
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March 11, 2015 8:54 pm  

You're never 'double taxed' - as a non-bona fide USVI resident you pay taxes on your stateside income to the IRS, and your VI-sourced income to the BIR. You file one 1040 with all your income and deductions on it, and use form 8689 to split it out between the two. You turn in the exact same paperwork to the IRS (in Charlotte) as you to to the BIR. The 1040 shows all your income and deductions, and the 8689 shows them both how it is divided between the two tax collecting entities.

When you are a bona-fide resident (presumably for the 2015 tax year) you pay all income tax on your worldwide income, from whatever source, to the BIR. FICA and Medicare is paid to the Federal government via the IRS (done for you if wages/salary from another, done yourself if you are self-employed).


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ChrisMI
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March 11, 2015 8:55 pm  

deleted, figured how to edit the form number in my post above


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Spartygrad95
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March 11, 2015 9:01 pm  

You're never 'double taxed' - as a non-bona fide USVI resident you pay taxes on your stateside income to the IRS, and your VI-sourced income to the BIR. You file one 1040 with all your income and deductions on it, and use form 8689 to split it out between the two. You turn in the exact same paperwork to the IRS (in Charlotte) as you to to the BIR. The 1040 shows all your income and deductions, and the 8689 shows them both how it is divided between the two tax collecting entities.

When you are a bona-fide resident (presumably for the 2015 tax year) you pay all income tax on your worldwide income, from whatever source, to the BIR. FICA and Medicare is paid to the Federal government via the IRS (done for you if wages/salary from another, done yourself if you are self-employed).

I paid no federal taxes on income here. That will obviously affect my return. So the 8689 form has a place for VI income and AGI from 1040. That seems like 2x and it seems like I'll be waiting for a refund from BIR not IRS. I am getting rum and forgetting this nonsense


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Exit Zero
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March 11, 2015 11:16 pm  

Buy plenty of rum - your dealing with the nonsense hasn't even started yet - wait for the 1st letter from the IRS -- it was simply explained here by quite a few helpful posts - there is no 'double taxation' involved - and actually you would save money on any VI income if there is State Income Tax in your original domicile


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Spartygrad95
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March 11, 2015 11:29 pm  

Buy plenty of rum - your dealing with the nonsense hasn't even started yet - wait for the 1st letter from the IRS -- it was simply explained here by quite a few helpful posts - there is no 'double taxation' involved - and actually you would save money on any VI income if there is State Income Tax in your original domicile

Ok I'm not an accountant nor am I a dummy.. How can adding income made in VI to my 1040 and then adding it again to form 8689 be anything else? I did the quick figures in my head here and lost 3/4 of my federal tax return by adding income from VI. If you are telling me that form 8869 will rectify that I'm highly dubious. I have not got upset about much since moving here but the fact there is not an EFILE option now for me for State, Federal and VI taxes is ridiculous. I can't believe I have to pay someone now to do math.


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Spartygrad95
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March 11, 2015 11:32 pm  

Thank you everyone for help but I guess I will just have someone prepare them for me. That way I can pay someone to receive less from Feds and nothing for years from VI


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ChrisMI
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March 11, 2015 11:46 pm  

I responded to your PM which hopefully will help.

For others reading, as an example, if you make $40k in the states, then moved and had $10k of VI source income, you have $50k of total income. If you have $10k in deductions your total 1040 AGI is now 40 + 10 - 10 = 40k total AGI on your 1040. Now you use for 8689 to split your AGI 80/20, since your income was 80% from the states and 20% from the VI. So your 40k AGI is now split as 32k taxable to the IRS and 8k taxable to the VIBIR.

I'll look again at my completed forms from 2013 when I get to my office in the AM to make sure I didn't misstate something in this thread or my PM Regardless, you are definitely not double-taxed. 8689 just helps you break it out. You can do it yourself. I am no accountant and I did with no problems (and the blessing of my corporate VI CPA and VI attorney who I spoke with about it).


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ChrisMI
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March 12, 2015 12:06 pm  

I checked my 2013 1040 and 8689 and confirmed, There's a part on 8689 where you total up what was withheld or sent in to the BIR, and the line instructs you to add it to (that year line 72) that place on the last line of your 1040 marked "total payments" and to write in the amounts, and "Form 8689" on that line. So the 8689 shows you how to break out the tax between the two entities, and you are credited for payments to both the IRS as well as the VIBIR.


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speee1dy
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March 12, 2015 2:08 pm  

I RECOMMEND DAVID JOHNSOn and jim sheets


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Spartygrad95
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March 12, 2015 2:10 pm  

I checked my 2013 1040 and 8689 and confirmed, There's a part on 8689 where you total up what was withheld or sent in to the BIR, and the line instructs you to add it to (that year line 72) that place on the last line of your 1040 marked "total payments" and to write in the amounts, and "Form 8689" on that line. So the 8689 shows you how to break out the tax between the two entities, and you are credited for payments to both the IRS as well as the VIBIR.

Gotcha. I could not find that line on 1040. Now that makes sense. I need to do 8689 first


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