Form 8689 - Allocation of Individual Income Tax to the US Virgin Island

Form 8689 is a tax form used by U.S. citizens and resident aliens who earned income from sources in the U.S. Virgin Islands (USVI) but are not bona fide residents. The form is used to allocate a portion of the individual's income tax liability to the USVI. Bona fide residents of the USVI are required to pay taxes on USVI income to the local tax jurisdiction, while non-bona fide residents must prorate their federal income tax liability to the U.S. Internal Revenue Service and the U.S. Virgin Islands Treasury based upon the amount of income sourced from the Virgin Islands. The form is used to determine the amount of income tax allocable to USVI sourced income. It does not increase a taxpayer's tax bill, but simply allocates the amount of tax that the taxpayer must pay to the federal government and the VI Bureau of Internal Revenue. The form is filled out by providing information about the taxpayer's income, deductions, and tax liability, and then calculating the portion of those items that are attributable to USVI sourced income. The form is then filed with both the IRS and the USVI Bureau of Internal Revenue.