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Taxes & no refunds  

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Fishbait
(@Fishbait)
Estimable Member

Good morning! My wife and I are thinking of moving to St Croix as retirees. With the recent financial picture darkening and the USVI government just announcing no tax refunds indefinitely, how do you deal with US & local taxes? (Other than just making sure you are under withheld so you pay rather than have the government keep your refund.)

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Posted : August 29, 2017 1:23 pm
speee1dy
(@speee1dy)
Islander

yeah, thats about it

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Posted : August 29, 2017 1:40 pm
STTsailor
(@STTsailor)
Island Expert

You have to underpay FICA. That is the only way to keep the local gov honest. There maybe slight penalty but if you expect refund you may not see it for a few years.

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Posted : August 29, 2017 1:47 pm
Exit Zero
(@exit-zero)
Noble Member

I don't think you will incur any penalty if you underpay FICA and pay your owed tax before April 15.

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Posted : August 29, 2017 2:08 pm
Fishbait
(@Fishbait)
Estimable Member

Thanks! We're from NY so we are used to getting soaked by taxes.

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Posted : August 29, 2017 2:27 pm
fdr
 fdr
(@fdr)
Noble Member

This is different from getting soaked. This is the government not returning money that its citizens overpaid. It's technically theft.

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Posted : August 29, 2017 2:29 pm
Scubadoo
(@Scubadoo)
Noble Member

If you are retired you should have a pretty good idea what your income and taxes will be. Withhold or pay quarterly only enough to cover it. If you are VI resident you fill out the same IRS 1040 forms but send all the money to the VI instead. IRS gets nada. As long as you pre-pay as much as you owed in the previous year there is no penalty. Then again, I've not gotten an IRS refund in years and years, always having to send in more with the return, never received a penalty yet and don't volunteer one.

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Posted : August 29, 2017 3:56 pm
Exit Zero
(@exit-zero)
Noble Member

Thanks! We're from NY so we are used to getting soaked by taxes.

Overall I think you will be happy with the tax situation if you move to the USVI from NY.
Real property tax is low compared to most stateside locales.
There is No State/territory income tax - just the Federal tax rate.
There is no sales Tax -- [although business owners pay a very regressive tax] -- Gross Receipts Tax - which increases the CUL.
The property transfer Stamp Tax is on the sale price or assessed value whichever is higher.
The road tax on Gasoline is modest.
The new "Sin Tax" on cigarettes,beer, alcohol and soft drinks has dramatically raised the CUL on people buying those products. I just read this morning NYC has raised the minimum price on a pack of cigarettes to over $13 - -it is still less than $4 pk. here.
There are often 'amnesty periods' for due taxes that exclude penalties.

under No Circumstances whatsoever should you depend on an Income Tax refund for loaning the IRB your money for years.
**** Make a copy of Everything submitted to the Govt. -- "it could get lost" is why!

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Posted : August 29, 2017 4:48 pm
East Ender
(@East_Ender)
Islander

"**** Make a copy of Everything submitted to the Govt. -- "it could get lost" is why!"

AMEN! (That means all government offices, not just IRB)

Also, if you do happen to overpay, you can apply it to your taxes the next year.But don't expect to get a check.

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Posted : August 29, 2017 8:18 pm
Alana33
(@Alana33)
Islander

Don't expect to get an income tax refund check anytime soon.
Just pay exactly what you owe, if you can.
Indeed keep proof of payment copies of EVERYTHING when dealing with VI Government including cancelled checks.

They onus is on you to provide proof.
Especially true for income and property tax payments.
They're terrible.

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Posted : August 29, 2017 8:30 pm
Scubadoo
(@Scubadoo)
Noble Member

At least IRB takes credit cards for property tax payment with no extra fee. Don't see that much in the states. Makes for getting receipts on-line easy plus the miles to go with it.

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Posted : August 30, 2017 1:17 am
stjohnjulie
(@stjohnjulie)
Prominent Member

Also, if you do happen to overpay, you can apply it to your taxes the next year.But don't expect to get a check.

You can only apply it to the next year taxes if you indicated that on your tax return when you filed. I tried to do this retroactively one year and I would have had to file an amended return, have it processed, etc, to make it happen. Had to shell out a couple of grand and wait for two years to give me the 8k they owed me from previous years.

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Posted : August 30, 2017 6:30 am
Scubadoo
(@Scubadoo)
Noble Member

Also, if you do happen to overpay, you can apply it to your taxes the next year.But don't expect to get a check.

You can only apply it to the next year taxes if you indicated that on your tax return when you filed. I tried to do this retroactively one year and I would have had to file an amended return, have it processed, etc, to make it happen. Had to shell out a couple of grand and wait for two years to give me the 8k they owed me from previous years.

Sounds a little silly but amended returns are not a big deal. You only have to file the differences. I just did one myself, only one sheet for what I needed. But if you think you'll ow next year might as well just do it.

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Posted : August 30, 2017 11:00 am
NorthsideKevin
(@NorthsideKevin)
Eminent Member

Why would you "underpay FICA"? That's Social Security and Medicare, etc., which all goes Stateside through your employer in any event. If self-employed, it's your "SE Tax" at 15.3% of taxable income, which likewise you have to pay Stateside. What I think you would underpay would be the V.I. withholding, claiming more exemptions, then square up by April 15th. Or, if self employed, simply don't pay anything all year (except any gross receipts due), then pay your tax and any penalty due on or before April 15th. A lot of people, I think, do that.

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Posted : August 30, 2017 11:20 am
ironheadUSVI
(@ironheadUSVI)
Reputable Member

Late refunds earn a 4% interest rate after June 30 of the filing year. And I rarely get a 1099 for the interest earned. If you can afford it, that's not too shabby a safe investment. Not as good a return as in the market or other methods (tax lien auctions) , but you know that you will get it back, eventually.

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Posted : August 30, 2017 11:28 am
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