Tax's on income

Use a simple 1040 rate book - with whatever simple deductions you would claim.
There is no 'VI state Tax'

does anyone know the answer to this:

i worked 5-6 months here (st. x) and 3 months in vermont. not sure how to file.

I don't know if this answer is right, but... When I checked with a tax preparer here on STX last year with the same question, here's what she said: "File your stateside and federal taxes in the states and your VI taxes here. If you try to tell either one of them that you're also paying the other, it'll be a big mess." So, that's what we did last year. So far, so good!

jtbaylee, the link to where you can find the answer to your question is here: 2011 IRS Publication 15. There are many variables that will affect your net pay (married, single, weekly, bi-monthly, allowances, etc.), but you'll find the tables on pages 36 through 58.

DixieChick: Where and what to file is based on which jurisdiction you were a resident of in 2010, which is wherever you lived most of the year (183 days or more, even if not consecutive). Some info is quoted below. VT probably has resident and non-resident tax forms. Eg: If you were a USVI resident, then file a VT non-resident state income tax form.

Either way, you probably owe VT state income tax on your VT source income.

Source income is generally based on where you performed the work, not where the source of the income was. That is, not where the employer or client was, in case you were tele-commuting.

From http://www.irs.gov/publications/p54/ch01.html
QUOTE
Resident of U.S. Virgin Islands (USVI)

If you are a bona fide resident of the USVI during your entire tax year, you generally are not required to file a U.S. return. However, you must file a return with the USVI. Send your return to the:

Virgin Islands Bureau of Internal Revenue
9601 Estate Thomas
Charlotte Amalie
St. Thomas, Virgin Islands 00802

Non-USVI resident with USVI income. If you are a U.S. citizen or resident alien and you have income from sources in the USVI or income effectively connected with the conduct of a trade or business in the USVI, and you are not a bona fide resident of the USVI during your entire tax year, you must file identical tax returns with the United States and the USVI. File the original return with the United States and file a copy of the U.S. return (including all attachments, forms, and schedules) with the Virgin Islands Bureau of Internal Revenue.

You must complete Form 8689, Allocation of Individual Income Tax to the U.S. Virgin Islands, and attach a copy to both your U.S. return and your USVI return. You should file your U.S. return with the address listed under Where To File.

See Publication 570, Tax Guide for Individuals With Income From U.S. Possessions, for information about filing Virgin Islands returns.
UNQUOTE

More about being "a bona fide resident of the USVI during your entire tax year":
http://www.irs.gov/publications/p570/ch01.html

wow its all so confusing but thanks bob. i now at least know which direction to go. i am a bona fide rest. of v.i.

taxes!!!! blahhhhh

I guess I was wondering how much is saved due to no state taxes?

Fairly easy to figure that out - depends what state you live in and any other local taxes that are assessed by income.

Not to be too negative, but believe me -- whatever you "save" in not paying state and local taxes, you'll more than make up for (lose) in the high prices of nearly everything here. Except, of course, alcohol, cigarettes, gas and getting your nails done. 😀

Hello!

Working to assist my son with his return (and have done many returns professionally previously) but am struggling with the USVI requirements.

Son moved there in October 2010 and thus has income from both areas. US Mainland and USVI. Reading Pub. 570 (extensively) and your post I have derived the following and would really like to verify:

1. All income (US & USVI) and all with-holding goes on a US Form 1040 and duplicate copies are filed with both the IRS & USVI. Correct?

2. Form 8689 must be completed and filed with both entities as well but there is where I get confused.

3. If I have already included USVI with-holding with US with-holding and enter on 1040 Line 61 and then complete Form 8689 it directs me to include the Form 8689 tax amount actually owed to the USVI (not with-holding) with the form number and include it as a payment on Federal 1040 Line 72.

4. IF this is done it seems like USVI with-holding is being credited twice. Once on Line 61 and again on Line 72 from the 8689.

5. Finally...........his withholding exceeds his USVI liability. Wil lhe see that refund from the USVI or IRS?

ANY help very, very much appreciated.

Steve

I also found a lawyer's blog from USVI where much of what he stated is far more logical than the details on the tax forms. In particular for example when one gets to the end of Form 8689 the directions state clearly that the number is to be transferred to 1040 line 72 however the lawyer stated that it should go to line 53 which makes total sense. Is it realistic to simply ignore the forms provided and their instructions? Thanks!

Steve

Clemfan, I can only answer question #5 confidently off-hand (and this is my non-professional opinion).

5. Finally...........his withholding exceeds his USVI liability. Wil lhe see that refund from the USVI or IRS?

STXBob says: The USVI (VIBIR) will only refund money to a person if it received payments from that person. Ditto for the IRS. Neither entity will refund money on behalf of the other.

Thanks much Bob.

Scariest part is I HAVE done taxes for 15 years professionally and the only thing I can say at the moment is that the instructions as written do NOT work. The odd part is that the lawyers blog does provide a solution but since it is not by the book I am in a quandary. And my three calls to USVI Revenue produced three totally different answers so I am struggling to try and figure out where to turn now.

Again, many thanks and if you have any other thoughts on obtaining any other expertise feel free to forward it.

Steve

Why not just try a local acct/CPA? I highly recommend Jim Sheets office. Is your son self employed or own a business? If not just fill the paperwork out like you would stateside(same forms) but he needs to take it to the VIBIR and turn in one copy and get his copy stamped.

Appreciate the advice but for as many years as I have done taxes I have had to "re-do" an awful lot of CPA prepared forms. They are highly trained with the numbers end of things but actually have less training in taxes and tax law than even new HR Block employees. I was able to make a contact who should be able to answer my questions. Thanks again.

That is why I recommended Sheets, he is a CPA but he is a excellent tax specialist.

Thanks again.