Welcome back! Ask questions, get answers, and join our large community of tax professionals.
cancel
Showing results for 
Search instead for 
Did you mean: 

Living in Puerto Rico with US income

TMac
Level 1

I have new client that has retirement from US job and social security, but has been living in Puerto Rico for the past couple of years. Has any one heard of a way to get a credit on US tax return because they are living in PR? Please and Thank you!

Labels (1)
0 Cheers
10 Replies 10
sjrcpa
Level 15

Might they have to file the Puerto Rico version of the 1040 and not the regular 1040?


ex-AllStar
TMac
Level 1

They don't have income in PR. What I found, that would omit them from having to file to claim worldwide income. Because its US generated (soc security and pension from US based company) I keep circling back to them having to file the US return. But don't see anything to give them any type of credit. And they have a home in PR, and a home here in there, but the daughter lives in it here and they don't charge her. Adding more complexity to it. And they had federal taxes taken out of pension - leading me back to regular 1040.

0 Cheers
sjrcpa
Level 15

What kind of credit are you looking for then?


ex-AllStar
0 Cheers
TMac
Level 1

I'm thinking its more of a tax break than a credit. They owe on federal and thought there may be a way to relieve some of the tax obligation because they actually been living in PR. Trying to see if anyone is aware of anything that I may be overlooking.

0 Cheers
BobKamman
Level 14

You do know, of course, that Puerto Rico is part of the United States?

TMac
Level 1

Yes I do. They have different tax implications as they have an independent tax system.

0 Cheers
BobKamman
Level 14

They do not have an independent tax system.  They have a "mirror" system that allows them to collect some federal taxes that otherwise be paid to IRS -- but not from retirees.  

0 Cheers
TMac
Level 1

This is straight from Pub 570:

The Commonwealth
of Puerto Rico
The Commonwealth of Puerto Rico has its own
separate and independent tax system. Although
it is modeled after the U.S. system, there are
differences in law and tax rates.

So, do you have an answer to my question? I know they have to file a federal 1040 for US as they have taxable pension income. They are just living in Puerto Rico - not making any income from Puerto Rico. So not required to file a Puerto Rico return. So are there any tax breaks or am I just looking for something that is not there?

 

0 Cheers
dkh
Level 11

Google for a tax preparer located in Puerto Rico - call them for a consult 

BobKamman
Level 14

Puerto Rico has an independent tax system because Congress allows them to do that.  It's much less "independent" than the tax system of (for example) the Navajo Nation, which was established by treaty and is therefore superior to the Constitution.  

You are looking for some sort of privileges -- other than American citizenship -- that are not there.