US Virgin Islands Taxes

The U.S. Virgin Islands requires that all bona fide residents, as well as certain non-residents, file territorial income tax returns each year. Bona fide residents file tax returns on their worldwide income with the territory. People who are U.S. citizens or residents who earn income from USVI-derived sources must file Virgin Islands taxes. Non-residents with territory-sourced income also must file territorial tax returns.

To qualify as a bona fide resident for tax purposes, individuals must meet three tests beginning in tax year 2006: (1) the presence test (generally 183 days in the territory during the tax year, or fewer than 90 days in the United States, or other qualifying conditions), (2) no tax home outside the territory, and (3) no closer connection to the United States or a foreign country than to the territory. More information on bona fide residency requirements can be found on the IRS website.

Members of the U.S. military and U.S government workers are not required to file territorial tax returns. However, they must file federal tax returns each year. Married couples consisting of a bona fide resident and a non-resident are required to file if one or both earn incomes from a USVI-derived source. These couples must file identical tax returns with both the territory and the IRS, using Form 8689 to determine the portion of tax owed to each jurisdiction.

The territory uses a mirror tax system based on the Internal Revenue Code. Tax rates and provisions generally match federal tax law, with the territory substituted for the United States where necessary. Bona fide residents cannot claim certain federal tax credits, including the Earned Income Credit, Additional Child Tax Credit, Credit for Other Dependents, or American Opportunity Tax Credit, on U.S. returns filed with the IRS. Contact the Virgin Islands Bureau of Internal Revenue to determine if similar credits are available on territorial returns.

Territorial income tax returns can be obtained by calling (340) 715-1040, or by going online at http://www.vibir.gov/. They can also be obtained by contacting the U.S. Virgin Islands Bureau of Internal Revenue at:

Virgin Islands Bureau of Internal Revenue 6115 Estate Smith Bay, Suite 225 St. Thomas, USVI 00802

Amended returns can be submitted by the completion of IRS Form 1040X. It is not necessary to send in the first return with this form. The 1040X form can be mailed to the same address as above.

Filing Extensions and Payment Arrangements

All territorial income tax returns must be filed by April 15 of each year, unless that date falls on a weekend or holiday. In that case, returns must be filed by the next business day.

Taxpayers who are unable to make that deadline can request a six-month tax filing extension. The extension gives taxpayers up to six months to file their returns. It does not grant an extension of any payment that may be owed. Payment must still be remitted by April 15.

Taxpayers who cannot pay their tax debts in entirety can request a monthly payment installment plan. They are required to fill out and submit Form 9465. Taxpayers who are required to make payments of estimated income tax or self-employment tax must obtain Form 1040-ES. Payments can be sent by check or money order to the Bureau of Internal Revenue at the address above.

People who are owed territory tax refunds can check the status of their returns at http://www.vibir.gov/ or by calling (340) 715-1040.

Frequently Asked Questions

What is the residency notification requirement?
Individuals who change their residency to or from the territory must file Form 8898 with the IRS Philadelphia Service Center on the due date of their income tax return, including extensions. This form is not attached to Form 1040 or 1040NR and must be filed separately. This requirement has been in effect since the Internal Revenue Code section 937(c) was established.

Can bona fide residents claim federal tax credits?
Bona fide residents cannot claim the Earned Income Credit, Additional Child Tax Credit, Credit for Other Dependents, or American Opportunity Tax Credit on U.S. income tax returns filed with the IRS. Residents should contact the Virgin Islands Bureau of Internal Revenue to determine if similar territorial credits are available and their eligibility requirements.

Who files with the IRS versus the territory?
Bona fide residents file their tax returns with the Virgin Islands Bureau of Internal Revenue and pay tax on their worldwide income to the territory. U.S. citizens or residents who are not bona fide residents but have territory-sourced income must file identical returns with both the IRS and the territory, using Form 8689 to allocate tax liability between the two jurisdictions.

Note: States & U.S. territories may make changes to their tax laws with little notice. We do our best to keep this information up-to-date, but it is provided on an "AS IS" basis. For more see our terms.