Virgin Islands W-2 vs US

[Peachie]

I have a client that worked temporarily in the Virgin Islands as a nurse. She has done this for three years. Her home of record has always been AL. Her W2 has always been a regular W2 issued by the agency that employed her in the VI. This year, for some reason, she was issued a W-2VI. She is not a resident of the VI and I have no idea why she received the W2 she received. I am at a loss here. In the past, I have prepared a regular 1040 and an 8689 and she has had no problems. However, the W2 was not a W-2VI.

Any comments as to why she would have received a W-2VI instead of a regular one? I have asked her to talk to her employer. She has left the VI and is now in IN with her home of record still being AL. No problem with any of this, but what would you suggest I do for her 2006 tax return? Perhaps, I should wait to see if she gets a corrected W2. Am I overly concerned here? Should I prepare the return as I have done in the past? It doesn't feel right to do this because of the tax document. I appreciate any direction.

Thanks.

Peachie

[George Boutwell]

How Long Was She There?

For what time period does she work there every year? Eight days? Eight weeks? Eight months?

[Peachie]

Hi George,

She was there for seven months.

Peachie

[George Boutwell]

Her home of record has always been AL. Her W2 has always been a regular W2 issued by the agency that employed her in the VI. ...She is not a resident of the VI

My address of record is the French Riviera, but the place where I have to spend most of my time considers me a resident and requires me to file its tax return.

[Peachie]

Perhaps, George,

but I will continue my research. She is not a resident of the VI as best I can tell. Thank you so much for your comments though. Next stop, IRS.

Peachie

[Bees Knees]

Just doing a quick glance at the W-2VI instructions, it says you file it if the employer withheld VI income tax. Was VI income tax withheld? If so, right or wrong, the form needed to be issued to the employee.

[George Boutwell]

Next stop, IRS.
Peachie

IRS Publication 570 would be a good place to start ---

>>U.S. Citizen or Resident Alien (Other Than a Bona Fide Resident of the USVI)
If you are a U.S. citizen or resident alien but not a bona fide resident of the USVI during the entire tax year, you must file identical tax returns with the United States and the USVI if you have:

Income from sources in the USVI, or

Income effectively connected with the conduct of a trade or business in the USVI.

File the original return with the United States and file a copy of the U.S. return (including all attachments, forms, and schedules) with the Virgin Islands Bureau of Internal Revenue by the due date for filing Form 1040. Use Form 8689 to figure the amount of tax you must pay to the USVI.

Form 8689. Complete this form and attach it to both the return you file with the United States and the copy you file with the USVI. . . .

Pay any tax due to the USVI when you file your return with the Virgin Islands Bureau of Internal Revenue. To receive credit for taxes paid to the USVI, include the amounts on Form 8689, lines 40 and 44, in the total on Form 1040, line 72. On the dotted line next to line 72, enter “Form 8689” and show the amounts.

See the illustrated example in chapter 5.

Where to file. If you are not a bona fide resident of the USVI during the entire tax year, but you have USVI source income, file Form 1040 and all attachments with the Internal Revenue Service Center, Austin, TX 73301-0215, and with the Virgin Islands Bureau of Internal Revenue at the address given under Where To Get Forms and Information, earlier.<<

[Peachie]

I have all of the info you posted George

because I used it when I initially filed her first tax return. I know how to do everything that you pointed out and have been doing it. My problem is everything is the same as the previous years, same job, same length of stay, etc, etc. However, this time, a W-2VI was issued and threw me completely off of my game. What changed to make them issue a different W2 format?

I have asked her to speak to her employer to get clarification about the W-2VI and see if a corrected one is needed. The two returns are really easy to do but I haven't had to do the VI first. It was always secondary. Once the return was complete and the federal forms signed for electronic filing, I was done except for the mailing of the return to the Federal agency that handled VI.

Bees: It looks to me like everything relates to the VI just as it has in the past but all of the figures were on a W2, not a W-2VI.

I so appreciate all of George's and your efforts to help me. Now, the taxpayer needs to find out why her status changed with her employer and I will have to work from the VI point of view. This is another learning experience for me. I am glad to be a part of this board's community. I can always count on input from the Master's.

Thank you.

Peachie.

[George Boutwell]

Where did she spend New Year's Eve?

I saw something that suggested it might make a difference where she resided December 31. Was she there then, in 2006? And not in prior years?

[Peachie]

LOL George. Here's why...

December 31, 2006, she lived in IN. Yes, that's correct. She will require four tax returns for 2006, Federal, VI, AL and IN. I have done all of the tax returns and have them on hold until I can get to the bottom of the regular W2 vs W-2VI. I like doing these kinds of tax returns because it requires me to do some research while putting all the pieces in their proper places. I just want them to be in their "correct" proper places.

Peachie