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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29781
Experience:  Taxes, Immigration, Labor Relations
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I am a U S citizen, who maintains residency in Puerto Rico

Customer Question

I am a U.S. citizen, who maintains residency in Puerto Rico (as home of record for my stateside employer). I have been working overseas (abroad), as an expat, for my stateside employer since 2002, and have established bonafide residency in my working country (in Asia) for tax purposes. I haven't filed a U.S. tax return since 2004, and wasn't sure if I should have or filed with PR, and in 2007 went over the tax exclusion limit. I would like to know, since my residency is still Puerto Rico and my employer is a stateside company and if I'm not mistaken, Puerto Rican residents do not pay Puerto Rican taxes on stateside income or am I wrong. My employer holds out SS, FICA, Medicare, etc. So do I owe the IRS, PR Hacienda, or no one?
Submitted: 6 years ago.
Category: Tax
Expert:  Lev replied 6 years ago.


Hi and welcome to Just Answer!

If you are a U.S. citizen or resident alien and also a bona fide resident of Puerto Rico during the entire tax year, you generally must file the following returns.

-- A Puerto Rican tax return reporting income from worldwide sources. If you report U.S. source income on your Puerto Rican tax return, you can claim a credit against your Puerto Rican tax, up to the amount allowable, for income taxes paid to the United States.

-- A U.S. tax return reporting income from worldwide sources, but excluding Puerto Rican source income.

-- If you are excluding Puerto Rican income on your U.S. tax return, you will not be allowed any deductions or credits that are directly or indirectly allocable to exempt income.

-- If all of your income is from Puerto Rican sources, you are not required to file a U.S. tax return.

If you are a U.S. citizen, you may also qualify under these rules if you have been a bona fide resident of Puerto Rico for at least 2 years before moving from Puerto Rico. In this case, you can exclude your income derived from sources within Puerto Rico (but not wages and salaries received as an employee of the U.S. Government or its agencies) that you earned before the date you changed your residence.


Please see for reference IRS publication 570 - Let me know if you need any help or clarification.