Tax & Accounting
Income tax returns for USVI residents and mainland filers with VI income
Where your return is filed, and who receives your withholding, follows from residency and from where the income was earned. We settle that first, then prepare and file.
The mirror system, and why it decides everything
The Virgin Islands applies the federal Internal Revenue Code as local law, with the territory in place of the United States and the Bureau of Internal Revenue in place of the IRS.
That substitution is where the work is. Whether you file with the Bureau, the IRS or both is a question of fact, not preference, and we settle it before any form is filled in.
We prepare returns for individuals, corporations, partnerships and the owners who report through them. Filing in the wrong place is the expensive mistake here, and it is usually made in good faith. If you have made it, or have not filed at all, say so on the first call. Cleaning it up is ordinary work for us.
Who files where: VIBIR, the IRS, or both
Four common positions, and we work out yours with you.
- Bona fide resident, all year
- Files with the Bureau only, on worldwide income. Income tax withholding belongs with the Bureau, not the IRS.
- Living stateside, income earned here
- Files with both. Form 8689 divides the tax in proportion to income earned in the territory, and the territory’s share goes to the Bureau.
- Moving in, or moving out
- The year of the move has its own rules, and Form 8898 is filed when bona fide residency begins or ends. Get advice before that year closes.
- Companies
- A Virgin Islands corporation files Form 1120 with the Bureau on its worldwide income, plus the territory’s 10% surtax on the liability. A mainland or foreign corporation with income effectively connected to the territory files Form 1120-F here.
How the return gets prepared
Bona fide residence turns on three tests: presence, tax home and closer connection. We run them on your facts, and the rest of the return follows from the answer.
Someone who did not prepare the return then reviews it against the source documents. Anything that does not tie, or that is a judgment call, comes back to you as a question.
Nothing is filed until you have signed, and Rodd Goldman, CPA, CFE signs every return that leaves the office.
How an engagement starts, from the intro call through to signing: our engagement process.
What we need from you
The list firms up after the first conversation, since it depends on your filing posture. Usually it looks like this.
- Wage, contractor, interest and dividend statements, and any Schedule K-1 you received
- Last year’s return, and where it was filed
- Where you lived and worked during the year, and roughly how the days split between the territory and the states
- For business or investment income, enough detail to separate what was earned here from what was earned elsewhere
- For a business return: legal name, employer identification number, entity type and where it is registered
- For a business return: a balance sheet and profit and loss for the year
- Written authority for the firm to prepare and file on your behalf
Plain answers to the residency questions are fine. We run the tests. If the books aren’t closed yet, we can close them first and carry them straight into the return.
Upload documents through your client portal, or drop them at the office. Please don’t email Social Security numbers or bank account numbers; if a filing needs one, you can enter it securely in the portal.
Questions
Common questions
Do I file with VIBIR, the IRS, or both?
It depends on residency and on where the income was earned. A bona fide resident for the whole year files with the Bureau only, on worldwide income. Someone living stateside with income earned here files with both, and Form 8689 divides the tax.
How is bona fide residency decided?
By three tests: presence, tax home and closer connection. It is a question of fact, not preference, and we run the tests on the facts you give us.
What changes in the year I move?
The year of the move has its own rules, and Form 8898 is filed when bona fide residency begins or ends. Get advice on that year before it closes.
I may have been filing in the wrong place. Can you fix it?
Yes. It is usually a good-faith mistake, and fixing it starts with the returns already filed.
Who signs the return?
Rodd Goldman, CPA, CFE signs every return that leaves the office, after a second review against the source documents by someone who did not prepare it. Nothing is filed until you have signed.
Settle where your return belongs.
We’ll walk your last few years and tell you what looks right, what looks exposed, and what we would take on.