Moving Year Taxes

Taxpayers moving to Puerto Rico during the tax year may be able to meet the requirements for bona fide residents of Puerto Rico (relevant U.S. possession) and be able to exclude their Puerto Rico source income from their U.S. tax return. U.S. citizens who have been bona fide residents of Puerto Rico for at least two years before moving from Puerto Rico during the current tax year may exclude from U.S. income tax on their income from Puerto Rico sources earned prior to the date of move if they meet certain conditions.

For example, Pedro who has been a bona fide resident of Puerto Rico for at least two years, moved to the U.S. in the middle of the tax year. During part of that year, he received income from Puerto Rico sources of $21,549. After moving to the U.S. he received income of $35,000. For the current tax year, Pedro will report $35,000 on his U.S. income tax return.