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Who must file an income tax return in Puerto Rico? Every individual who during the taxable year has net income subject to alternate basic tax of $150,000 or more.
Here are the income tax filing requirements for tax year 2021. Not everyone is required to file their taxes. Whether you need to file your taxes depends on four factors: your income, filing status, age, and whether you fall under a special circumstance.
Puerto Rico is an unincorporated territory of the United States and Puerto Ricans are U.S. citizens; however, Puerto Rico is not a U.S. state, but a U.S. insular area. Consequently, while all Puerto Rico residents pay federal taxes, many residents are not required to pay federal income taxes.
You must file a federal tax return if you are a U.S. citizen who is also a bona fide resident of Puerto Rico during the fiscal year and receive income as a U.S. government employee in Puerto Rico.
If you move to the island, you can legally pay none. Theres also no capital gains tax. You just have to give 4 percent of your income to Puerto Rico. The tax break was started by a Puerto Rican politician whod watched years of high taxes fail to improve life on the island.
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Individuals who fall below the minimum may still have to file a tax return under certain circumstances; for instance, if you had $400 in self-employment earnings, youll have to file and pay self-employment tax. If you have no income, however, you arent obligated to file.
If your home of record is one of the fifty states, then even if you are stationed in Puerto Rico, the income is sourced to Puerto Rico. You must file a Puerto Rico tax return reporting income from Puerto Rico sources, and a U.S. tax return reporting income from worldwide sources.
Puerto Rican residents are taxed in Puerto Rico on their worldwide income, no matter where the income is sourced. Puerto Rican non-residents are only taxed in Puerto Rico on their Puerto Rico-source income. Income for services performed is sourced to Puerto Rico based on where the services are performed.
Residents of Puerto Rico who arent required to file a U.S. income tax return must file Form 1040-SS or Form 1040-PR with the United States to report self-employment income and if necessary, pay self-employment tax.
We calculate the Failure to File Penalty in this way: The Failure to File Penalty is 5% of the unpaid taxes for each month or part of a month that a tax return is late. The penalty wont exceed 25% of your unpaid taxes.

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