How the information from Form W-2VI U.S. Virgin Islands Wage and Tax Statement is reported on your return depends on whether you were considered a BONA FIDE resident of the U.S. Virgin Islands.

Per the IRS Individuals Living or Working in U.S. Territories/Possessions webpage:

IRC 937 establishes the criteria for determining the residency of an individual in American Samoa, the CNMI, Guam, Puerto Rico, and the U.S. Virgin Islands, and for determining whether income is sourced in a U.S. territory. An individual is generally considered a bona fide resident of a U.S. territory if he or she (1) is physically present in the territory for 183 days during the taxable year, (2) does not have a tax home outside the territory during the tax year, and (3) does not have a closer connection to the U.S. or a foreign country. However, U.S. citizens and resident aliens are permitted certain exceptions to the 183-day rule. For a detailed explanation of the U.S. territory residency rules and income sourcing rules, please refer to Publication 570 Tax Guide for Individuals With Income From U.S. Possessions.

If you were a bona fide resident of the USVI for the entire year, you should not be filing Form 8689 Allocation of Individual Income Tax to the U.S. Virgin Islands. Also, there may be certain situations in which it is correct to pull the Box 2 withholding amount to the tax return.  If you are filing Form 8689, then it would be incorrect to also list the withholding in Box 2 of the Form W-2VI as both would transfer to the payments section of the return.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the webpage or document at the time it is accessed.