Reader Pat, a V.I. government retiree living in the states, asked about filing taxes with V.I. pension income:
"My 2013 tax refund has been held up now for over a year. Seems like they won’t release my 2014 refund either until the 2013 gets cleared up. After many months of calling the IRS it was finally determined that the problem was that they had not received my 1099 from GERS (Government Employee Retirement System.) I emailed the GERS Administrator asking that a duplicate be sent to the IRS. He turned it over to someone who informed me that it had been sent to the IRB (Internal Revenue Bureau) on St. Thomas because I had not turned in Form 8689 which was to be filed every year. This was the first I had ever even heard of from 8689. When I left the V.I. in 2008 I was told to file Form 8898 with my taxes which I did. I called the IRB this morning thinking I could get through since Carnival was over but I got shunted to the general mailbox which the voice mail indicated was full. My questions to you is do you file this Form 8689 each year? Does it go in with your tax return to the IRS or does it get sent to the V.I.? Did you also file the 8898 the first year you were back in the states? I am so confused right now and really frustrated."
The Source contacted IRB Chief Legal Counsel Tamara Parson Smalls for a definitive answer.
"The Form 8689 is filed with the V.I. along with a copy of the Form 1040. The original 1040 and a copy of the Form 8689 is filed with the IRS. Form 8689 is filed for any given year that a U.S. resident taxpayer has income from the Virgin Islands," Smalls said.
Form 8898 (http://www.irs.gov/pub/irs-pdf/f8898.pdf ) is a "Statement for Individuals Who Begin or End Bona Fide Residence in a U.S. Possession. A Virgin Islander moving to the states or vice versa must file this form one time, just for the year of the move.
Form 8689 ( http://www.irs.gov/pub/irs-pdf/f8689.pdf ) is entitled: "Allocation of Individual Income Tax to the U.S. Virgin Islands." It would be filed every year there is V.I. sourced income for a non-V.I. resident. So a former V.I. government employee receiving a V.I. pension while living stateside would file Form 8898 the year they moved stateside, and would file Form 8689 that year and every year they continue to receive the pension and also live outside the USVI.
The income allocation Form (8689) is filed both to the IRS and IRB, along with the 1040 tax return form.
Do not include Form 8898, the change of residence notification, with the tax return. Instead, the IRS website instructs taxpayers to mail form 8898 by itself to: Department of the Treasury Internal Revenue Service Center Philadelphia, PA 19255-0549.