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USVI taxes

 
cagrace
(@cagrace)
Advanced Member

hello all!
this will be my first year filing taxes here in the USVI, and of course the IRB website isn't very helpful at telling me what forms i need to file. can someone please help me?
both my husband and i have income in 2009 from employers here in STX and in Florida.
does anyone know which forms we need?
are there separate submissions for USVI taxes and federal taxes?
thanks!
CG

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Topic starter Posted : March 8, 2010 5:50 pm
STXBob
(@STXBob)
Trusted Member
cagrace
(@cagrace)
Advanced Member

Thank you for the links to these prior discussions, but none of them answer my questions about which forms I need to file, and if I still have to file federal taxes and USVI taxes. Someone please help!
CG

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Topic starter Posted : March 8, 2010 8:19 pm
dntw8up
(@dntw8up)
Trusted Member

If you were a VI resident on December 31, 2009 you only file in the VI. You include all earnings (FL and STX), use the Federal forms, and file with the local IRB.

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Posted : March 8, 2010 8:53 pm
STXBob
(@STXBob)
Trusted Member

If you were a VI resident on December 31, 2009 you only file in the VI. You include all earnings (FL and STX), use the Federal forms, and file with the local IRB.

That answer is wrong. See this: http://www.irs.gov/publications/p570/ch03.html#en_US_publink1000221346
"File your tax return with the USVI if you are a U.S. citizen, resident alien, or nonresident alien and a bona fide resident of the USVI during the entire tax year. "

Also see this: http://www.irs.gov/businesses/small/international/article/0,,id=97321,00.html
“Under the new Section 937 an individual is generally considered a bona fide resident of a possession if (1) he or she is physically present in the possession for 183 days during the taxable year, (2) does not have a tax home outside the possession 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.”

So if you were physically here from July 2, 2009 to December 31, 2009, you might be a bona fide resident. If you came and went, then count up the days you were here.

By the way, for any telecommuters, "source income" is a term that sometimes trips people up, and they end up paying taxes to the wrong jurisdiction. It usually refers to where the work was performed, not where the money came from. So if you performed work in USVI for a company in FL (such as by telecommuting), you should pay income tax to USVI, not to FL, assuming you were a bona fide USVI resident.

http://www.irs.gov/businesses/small/international/article/0,,id=106065,00.html
“All wages and any other compensation for services performed in the United States are considered to be from sources in the United States. The place where the services are performed determines the source of the income, regardless of where the contract was made, the place of payment, or the residence of the payer.”

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Posted : March 9, 2010 11:27 am
Linda J
(@Linda_J)
Expert

I'm no tax expert, but the phrase "during the entire tax year" must mean something.

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Posted : March 9, 2010 4:19 pm
Juanita
(@Juanita)
Expert

Their is an IRS office on St. Thomas. Call and ask for Rhea. She's very helpful. THEN...call the local IRB and ask. If you get different answers (likely), I would trust Rhea's answer, but just to be sure, then call a tax professional. I will be glad to give you the name of the gentleman we use. He is on St. Thomas, but it's just a phone call. Pretty sure he would answer the question for you without obligation to use him.

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Posted : March 9, 2010 5:46 pm
STXBob
(@STXBob)
Trusted Member

Here's a discussion on the matter from 2007, and it was just as confusing then:
https://www.vimovingcenter.com/talk/read.php?4,66833,66843

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Posted : March 9, 2010 7:32 pm
dntw8up
(@dntw8up)
Trusted Member

If you were a VI resident on December 31, 2009 you only file in the VI. You include all earnings (FL and STX), use the Federal forms, and file with the local IRB.

That answer is wrong.

I asked the IRS before moving here, moved here in October of one year, and paid that entire year's taxes to the IRB. I was subsequently audited by the IRS, which they claimed they do routinely when incomes over a certain threshold claim residency in the territory. The IRS sent an agent from Puerto Rico and he found no irregularities.

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Posted : March 9, 2010 8:22 pm
STXBob
(@STXBob)
Trusted Member

dntw8up: That's seems strange. Is there any documentation at irs.gov or elsewhere which explains your situation?

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Posted : March 10, 2010 12:00 am
dntw8up
(@dntw8up)
Trusted Member

I don't know about any IRS documentation -- I struggle to understand the tax forms I file every year -- but I was told the IRB was responsible for sending the IRS a portion of the taxes I paid the IRB that year. I was due a substantial refund that year, and even though I paid the IRB the refund was sent from the IRS after the audit, and the check included three years of interest.

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Posted : March 10, 2010 12:43 am
StCroix
(@StCroix)
Advanced Member

When I went in to get my forms 'stamped' this year and filed a copy, I asked the gal if "the government had enough money for refunds this year." She just laughed.

Looking forward to the annual "Did You Get Your Return Yet" thread.

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Posted : March 10, 2010 2:02 am
CAtoSTX
(@CAtoSTX)
Trusted Member

So what does one do if they moved here under the 183 mark? file taxes everywhere?

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Posted : March 10, 2010 2:10 am
jerrydcs
(@jerrydcs)
Advanced Member

ok here is one can anyone tell me

i own a business in states in 2010 i plan on being on island more then 183 days and i plan on starting a business on island

this is what i think my business files a return in states but k1 from that bussiness will be filed in vi along with bussiness in vi and k1 from island business am i right

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Posted : March 10, 2010 5:42 am
Bombi
(@Bombi)
Trusted Member

The first year I lived here I had to file both in Maine and the VI. I had income from both. I filed the ME income in ME and the VI in the VI.

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Posted : March 10, 2010 10:32 am
Linda J
(@Linda_J)
Expert

Yes, if you owe STATE taxes for the year, those have to be paid to the state you came from. The first year we were here we filed VI(federal) and Kentucky tax. I think.

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Posted : March 10, 2010 11:55 am
stxfoodie
(@stxfoodie)
Advanced Member

If you are a full time resident of the USVI (simplistically did you spend 183 days or more here during the year) you must file in the USVI. You will have to file a 1040 and a 1040info form. You may be required to file a form 8898 with the IRS. Go to the IRS website and get the instructions for this form and see if you are required to file. You will need to file an 8822 change of address form with the IRS and the USVI BIR. Also available on the IRS website.

If you are not a USVI resident for the year, you would have to file your 1040 in the states. You would have to include form 8689 (check the IRS website) and file a courtesy copy with the USVI BIR assuming you have USVI income which you say you have.

But as always, I do not suggest taking tax advice from a website forum. Please contact a local CPA for appropriate tax advice.

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Posted : March 10, 2010 12:28 pm
br1k
 br1k
(@br1k)
Advanced Member

I asked the IRS before moving here, moved here in October of one year, and paid that entire year's taxes to the IRB. I was subsequently audited by the IRS, which they claimed they do routinely when incomes over a certain threshold claim residency in the territory. The IRS sent an agent from Puerto Rico and he found no irregularities.

Thanks for mentioning this. Wow, that alone is a good enough reason to keep "tax residency" elsewhere. This is a ridiculous rule, but if I have to pay state tax somewhere to avoid actually talking to an IRS agent - so be it. No frigging way.

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Posted : March 10, 2010 12:45 pm
popflops
(@popflops)
Advanced Member

The answers I found online were exactly opposite what STX tax preparers and locals told me... I read that you must submit "identical returns" to both the IRB and IRS, which seemed odd to me. Everyone I actually spoke to though, said that you file what you earned in the states with the IRS and what you earned in the VI with the IRB. The reason I was given is that the two entities have nothing whatsoever to do with each other and both will claim that you owe them the money, causing an enormous headache. Obviously, you also have to file state and abide by the residency issue mentioned above.

Good luck! (It was clear as mud to me) 🙂
Lisa

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Posted : March 10, 2010 7:02 pm
dntw8up
(@dntw8up)
Trusted Member

I asked the IRS before moving here, moved here in October of one year, and paid that entire year's taxes to the IRB. I was subsequently audited by the IRS, which they claimed they do routinely when incomes over a certain threshold claim residency in the territory. The IRS sent an agent from Puerto Rico and he found no irregularities.

Thanks for mentioning this. Wow, that alone is a good enough reason to keep "tax residency" elsewhere. This is a ridiculous rule, but if I have to pay state tax somewhere to avoid actually talking to an IRS agent - so be it. No frigging way.

It's not a "rule," just customary behavior to prevent fraud. And filing in the states is no guarantee that you won't be audited. In fact, the vast majority of people who are audited live in the states.

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Posted : March 11, 2010 1:06 am
dntw8up
(@dntw8up)
Trusted Member

Please do not PM me with questions about what amount goes on which line of the tax forms as I am not an accountant. The folks at the IRB should be able to help you, especially as it is well before the filing deadline.

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Posted : March 11, 2010 1:09 am
brockettfamily
(@brockettfamily)
Advanced Member

It used to be that you would need to file taxes in any jurisdiction that you had an income. Meaning, if you lived in two different states in 2009, then you would file your federal tax return and state returns for both states. If you own a business in the states and in the VI, then you will need to file taxes in both places. You would also need to file in both places if you were an employee in both places during the tax year. I don't know if things have changed since then or not. You should really call and talk to a professional to avoid any audits. Once they audit you once, they keep a close eye on you for several years to come after that. Good luck!!

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Posted : March 15, 2010 1:14 am
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