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Puerto Rico Open Software License
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Further, Resident Individuals must apply for and obtain a tax exemption decree under Act 60. To obtain access to the approved and signed tax exemption decree, a one-time fee of $5,000 must be satisfied and deposited into a special fund to promote the relocation of Resident Individuals to Puerto Rico.
The term "foreign country" does not include U.S. territories such as Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, the U.S. Virgin Islands, or American Samoa.
Puerto Rico is a US territory, which means that all income generated in Puerto Rico is exempt from additional US federal tax. Other tax advantages: Under Act 22 (Individual Investors Act), qualifying Puerto Rico residents are 100% exempted from capital gains tax.
Residents of Puerto Rico must file Forms 1040-SS or Form 1040-PR to claim their 2021 Child Tax Credit (CTC) for their qualifying children. For additional information on claiming this credit, please see the Instructions for Form 1040-PRPDF or the Instructions for Form 1040-SSPDF.
If you're a bona fide resident of Puerto Rico during the entire tax year, you generally aren't required to file a U.S. federal income tax return if your only income is from sources within Puerto Rico.
Expats simply qualify for the Foreign Earned Income Exclusion when they meet the Physical Presence or the Bona Fide Residency Test. There are no additional requirements imposed by their residency country.
2 As a result, although Puerto Rico belongs to the United States and most of its residents are U.S. citizens, the income earned in Puerto Rico is considered foreign- source income and Puerto Rico corporations are considered foreign.
Puerto Rico corporations are treated as foreign corporations for U.S. income tax purposes.
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