Virgin Islands payroll that remits where the territory requires

Two agencies, one payroll

Payroll here has a split that trips people up: it can look correct in the software and be wrong at the agency.

Income tax withheld from a bona fide Virgin Islands resident’s wages is remitted to the Bureau of Internal Revenue. Social security, Medicare and FUTA on the same wages are still reported and paid to the IRS.

Residency is the same question an individual return turns on, so we keep the payroll file and the income tax file together. It is tested on facts, not on where someone says they live.

Most mainland payroll software assumes IRS routing for everything, so a business can run clean payroll for years on a national platform and find that none of the income tax withholding ever reached the Bureau.

The Virgin Islands payroll tax split

Income tax withholding

For a bona fide Virgin Islands resident, remitted to the Bureau of Internal Revenue, not the IRS.

Social security, Medicare and FUTA

Still reported and paid to the IRS. This half of the payroll does not change.

What we handle

Wage calculation, withholding, remittance and the quarterly payroll reporting.

How we take on your payroll

We start with what you run payroll on now and where the filings have been going. That review alone shows whether the routing has been right and how far back any problem goes.

Then we set up your people, their classifications, the pay schedule and each employee’s residency-based withholding, run the payroll, remit to each agency and handle the quarterly reporting.

We are still building this side of the practice, so we take payroll on selectively. We will tell you on the intro call whether we can take yours, rather than signing you up and working it out later.

How an engagement starts, from the intro call through to signing: our engagement process.

What we need from you

We need enough to set the payroll up correctly the first time.

• Legal name, employer identification number, entity type, and where your people actually work
• Who is on payroll, their pay and pay schedule, and whether anyone is a contractor rather than an employee
• Where each employee lives and works, since residency decides where their withholding goes
• The most recent payroll returns filed, and the agency they went to
• Reports from your current payroll system, if there is one

The prior returns are the fastest tell. If the last few quarters all went to one agency, that is usually where the conversation starts.

Please don’t email Social Security numbers. Payroll setup needs them, so you’ll enter them securely in your client portal.