Form 8689 (2019)
Page 3
Section references are to the Internal Revenue Code
unless otherwise noted.
Future Developments
For the latest information about developments related to
Form 8689 and its instructions, such as legislation
enacted after they were published, go to
www.irs.gov/Form8689.
Instructions
Purpose of form. Use Form 8689 to figure the amount of
U.S. tax allocable to the U.S. Virgin Islands (USVI).
Who must file. If you were a U.S. citizen or resident alien
(other than a bona fide resident of the USVI) and had
income from sources in the USVI or income effectively
connected with the conduct of a trade or business in the
USVI, you may owe tax to the USVI. Your USVI tax
liability is a percentage of your U.S. tax liability.
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CAUTION
Do not use this form if you were a bona fide
resident of the USVI during the entire tax year,
or were considered a bona fide resident of the
USVI for the entire tax year under the special
rules for the year of a move (see chapter 1 of Pub. 570,
Tax Guide for Individuals With Income From U.S.
Possessions).
Joint returns. If you file jointly and only one spouse is
a bona fide resident of the USVI for the entire tax year,
the resident status for both spouses and subsequent tax
treatment is determined by the spouse with the higher
adjusted gross income (AGI) (disregarding community
property laws). File Form 8689 only if the spouse with the
higher AGI is not a bona fide resident of the USVI for the
entire tax year.
Where to file. You must file identical tax returns with the
United States and the USVI. If you are not enclosing a
check or money order, file your original Form 1040 or
1040-SR (including Form 8689) with the Department of
the Treasury, Internal Revenue Service Center, Austin, TX
73301-0215 USA.
If you are including a check or money order, file your
original return with the Internal Revenue Service, P.O. Box
1303, Charlotte, NC 28201-1303 USA.
File a signed copy of your Form 1040 or 1040-SR (with
all attachments, forms, and schedules, including Form
8689) with the Virgin Islands Bureau of Internal Revenue,
6115 Estate Smith Bay, Suite 225, St. Thomas, VI 00802.
They will accept a signed copy of your U.S. return and
process it as an original return.
Amended returns. Send your Form 1040-X to the IRS at
the address in the Instructions for Form 1040-X. Send
your Form 1040-X to the USVI at the address for the
Virgin Islands Bureau of Internal Revenue under Where to
file, earlier.
Additional information. Pub. 570 has more information
and an example of how to complete Form 8689. To get
Pub. 570, see How To Get Tax Help in the Instructions for
Forms 1040 and 1040-SR.
Part I—Income From the U.S. Virgin Islands
(USVI)
Source of income. The rules for determining the source
of income are explained in sections 861 through 865 and
937, Regulations section 1.937-2, and chapter 2 of Pub.
570. Some general rules are:
• The source of wages, salaries, or tips is generally where
the services are performed. If you worked both in and
outside the USVI, include on line 1 only wages, salaries,
or tips earned while you were in the USVI. However,
certain income earned while temporarily performing
services in the USVI will not be considered USVI source
income. For details, see De minimis exception, later.
Active duty U.S. Armed Forces. If you are a bona fide
resident of the USVI and are stationed outside of the USVI,
your military compensation will be sourced in the USVI
under the Servicemembers Civil Relief Act (SCRA). If you
are not a bona fide resident of the USVI but are stationed
in the USVI, however, your military compensation will not
be sourced there. For further details, see Pub. 570.
Military spouses. If you are the civilian spouse of a
member of the U.S. Armed Forces, work in the USVI, and
retain a residence or domicile in one of the 50 states, the
District of Columbia, or another U.S. territory, under the
Military Spouses Residency Relief Act (MSRRA) your
wages, salaries, tips, and self-employment income will not
be considered income from the USVI. Under MSRRA, the
military spouse must be in the USVI solely to be with his/
her servicemember spouse who is serving in compliance
with military orders. For details on MSRRA, see Pub. 570.
• The source of interest income is generally where the
payer is located. For example, interest from a certificate
of deposit issued by a USVI bank or a USVI branch of a
U.S. bank is USVI source income.
• Generally, dividends are sourced where the paying
corporation is created or organized.
• Taxable refunds, credits, or offsets of local USVI income
taxes include only nonmirror code income taxes.
• Alimony received from a person who is a bona fide
resident of the USVI is USVI source income.
• Except as provided in regulations, income earned after
December 31, 2004, that is from sources within the
United States or effectively connected with the conduct
of a trade or business in the United States is not income
from the USVI.
• The source of gains, profits, or income from the sale or
disposition of real property (and any interest in real
property) is generally where the real property is located.
Personal property. The source of income from the sale
of nondepreciable personal property is generally the seller’s
residence. For example, if you are a bona fide resident of
the USVI, gain from the sale or disposition of personal
property is generally from sources within the USVI. Income
from the sale of inventory is generally sourced where the
title to the property passes. See section 865 for details.
De minimis exception. This is an exception to the
general rule for determining the source of income earned
in the USVI. Generally, income from the USVI does not
include compensation for services performed in the USVI
if during 2019 you:
• Were a U.S. citizen or resident;
• Were not a bona fide resident of the USVI;
• Were not employed by or under contract with an
individual, partnership, or corporation that is engaged in a
trade or business in the USVI;
• Temporarily performed services in the USVI for 90 days
or less; and
• Earned $3,000 or less from such services.
