Bona Fide Resident of Puerto Rico: Tax Implications and Filing Requirements
A bona fide resident of Puerto Rico is an individual who has established a permanent home in Puerto Rico and intends to remain there for the entire tax year. This status has significant implications for U.S. federal income tax filing, including exclusions from U.S. taxation on certain types of income earned in Puerto Rico.
Income Exclusion from U.S. Taxation
- Under Code section 933, bona fide residents of Puerto Rico can exclude from gross income all income from sources in Puerto Rico, except for income earned as an employee of the United States or its agencies.
- This exclusion applies to wages, salaries, and other compensation for services performed in Puerto Rico.
- Income from U.S. government employment in Puerto Rico is not eligible for exclusion and must be reported on Form 1040.
Filing Requirements and Forms
- Bona fide residents must file Form 1040 or Form 1040-SR if they have U.S.-source income or other taxable income.
- Use Form 1040-SS (U.S. Self-Employment Tax Return) if you are self-employed and have qualifying children.
- Special instructions for bona fide residents are provided in Publication 1321, which details adjustments needed when claiming exclusions.
Tax Credits and Deductions
- Special rules apply for claiming the Child Tax Credit and Additional Child Tax Credit. Refer to the instructions for Schedule 8812 (Form 1040).
- Bona fide residents cannot claim the Earned Income Tax Credit (EITC).
- For Social Security benefits, use Publication 915 to determine taxable amounts.
Foreign Tax Credit and Adjustments
- If you paid taxes to Puerto Rico on income that is excluded from U.S. taxation, you may claim a foreign tax credit using Form 1116.
- Calculate the allocable portion of foreign taxes using the formula provided in Publication 1321.
- Example: If total income is $60,000 and total taxes paid to Puerto Rico are $3,010, then $903 (calculated as $18,000 / $60,000 × $3,010) is allocable to excluded income and can be claimed as a reduction on Form 1116.
Extensions and Deadlines
- Bona fide residents may apply for an automatic 6-month extension to file Form 1040-SS by filing Form 4868 by April 15, 2026 (for calendar year taxpayers).
- The extension extends the filing deadline to October 15, 2026.
Additional Resources
For detailed guidance, refer to the following IRS publications and forms:
Source:
Publication 1321 - Special Instructions for Bona Fide Residents of Puerto Rico
Form 1040-SS Instructions
Form 1116 Instructions
Publication 915 - Taxation of Social Security Benefits
Disclaimer: Always verify information with official Federal or State Department of Revenue Forms and Instructions before filing your tax return.