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Ask Lane Your Own Question
Category: Tax
Satisfied Customers: 11822
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Do non-residents of Puerto Rico have to file a tax return on

Customer Question

Do non-residents of Puerto Rico have to file a tax return on wages earned in Puerto Rico when the employer withholds taxes? What rate is withheld on the salary earned in Puerto Rico?
Submitted: 8 months ago.
Category: Tax
Expert:  Lane replied 8 months ago.

Hi. I can help here ... My name's Lane


Because PR is what we call a freely associated state, it has its own tax code (Código de Rentas Internas). Although the code bears marked similarities to the US tax code (Internal Revenue Code), there are significant differences.

Income in Puerto Rico may be taxable under its own code, the US tax code, or both. In general, the two codes apply to income generated in their respective states.


Of importance here, both Puerto Rico and the US tax the global income of their residents. This means that Puerto Rico residents with US source income and US residents with Puerto Rico source income will be double taxed on that income.


HOWEVER, both allow a tax credit for taxes paid to the source on such income: the US for Puerto Rico source income, and Puerto Rico for US source income. This credit is calculated on Form 1116 for a US tax return, and Schedule C for a Puerto Rico return.


You can see the tax rates here:

Customer: replied 8 months ago.
My question is on non-residents working in Puerto Rico. If the employer withholds taxes whate rate should they withhold at and does the non resident have to file? Is it a flat 20%?
Expert:  Lane replied 8 months ago.

As I mentioned above the non-residemt does have to file. (" US residents with Puerto Rico source income will be double taxed on that income.") you must file to see whether you owe additionally are are due a refund, based on what was withheld, and your income levels


See this:


The following rates remain in effect for 2015 and future years:

Net taxable income (USD)Tax

Not over 9,000 - 0%

Over 9,000, but not over 25,000 - 7% of the excess over USD 9,000

Over 25,000, but not over 41,500USD - 1,120 plus 14% of the excess over USD 25,000

Over 41,500, but not over 61,500USD - 3,430 plus 25% of the excess over USD 41,500

Over 61,500USD 8,430 plus 33% of the excess over USD 61,500


And yes, for nonresident individual citizens of the United States, the withholding rate is 20%.