In general, United States citizens and resident aliens who are bona fide residents of Puerto Rico during the entire tax year, which for most individuals is January 1 to December 31, are not required to file a U.S. federal income tax return if they have income only from sources within Puerto Rico. If they have income from sources outside of Puerto Rico, including within the 50 states or the District of Columbia, or if they are employees of the U.S. government, they are required to file a U.S. federal income tax return. Bona fide residents of Puerto Rico generally do not report income received from sources within Puerto Rico on their U.S. income tax return. However, they should report all income received from sources outside Puerto Rico on their U.S. income tax return. Residents of Puerto Rico who are employed by the government of the United States, including members of the armed forces of the United States, also should report all income received for their services to the government of the United States on their U.S. income tax return.
Special rules apply to civilian spouses of active duty members of the U.S. Armed Forces who work in Puerto Rico but retain their tax residency status in one of the 50 states or the District of Columbia, and have the same tax residency as their spouses before the move, under the Military Spouses Residency Relief Act. If these spouses’ Puerto Rican income is only from wages, salaries, tips, or self-employment, they will only file a U.S. income tax return. For more information on how MSRRA applies to civilian spouses, refer to Publication 570 and Notice 2012-41.
United States citizens or resident aliens who are not bona fide residents of Puerto Rico during the entire tax year are required to report all income from whatever source derived on their U.S. income tax return. However, U.S. citizens who change residence from Puerto Rico to the United States and who were bona fide residents of Puerto Rico for a period of at least two years before changing residence can exclude from U.S. taxable income the Puerto Rican source income attributable to the time they were bona fide residents of Puerto Rico.
If you are a bona fide resident of Puerto Rico and qualify to exclude your Puerto Rican source income on your U.S. tax return, you must determine your adjusted filing requirement based on the filing thresholds shown in the tax return instructions. For more information about how to determine the amount of income that requires filing a U.S. income tax return, refer to Publication 570 and Publication 1321 (PDF).
If you have no U.S. filing requirement but have income that is effectively connected with a trade or business in Puerto Rico, you must file Form 1040-SS (PDF) or Form 1040-PR (PDF) with the United States to report your self-employment income and, if necessary, pay self-employment tax. For more information on self-employment reporting requirements, see the Form 1040-SS Instructions (PDF) and Form 1040-PR Instructions (PDF).
Page Last Reviewed or Updated: March 20, 2014