I often hear remarks that the 1% should be paying their fair share of taxes and that wealthy individuals are unfairly given tax breaks compared to middle/lower economic classes. In reality, the top 1% of income-tax filers contributed 40.4% of the revenue in 2022, based on recently released IRS data. Meanwhile, the top 10% of

When U.S. citizens move to Puerto Rico to take advantage of the tax incentives under Act 60 (formerly Act 20/22), they must navigate several U.S. tax compliance requirements, one of which is Form 8898. This form is essential for individuals who become bona fide residents of Puerto Rico and are seeking to benefit from the

Small and medium-sized businesses, or PyMEs (from the Spanish abbreviation), are a vital component of Puerto Rico’s economy, significantly contributing to employment and economic growth. According to the Department of Economic Development and Commerce’s (DEDC) PyMEs Annual Report, in 2019, PyMEs made up 91.4% of all businesses in Puerto Rico, accounted for 44.8% of private-sector

At my firm, I always get the question from my clients “Do I really need to stay for 3 years?” The answer is yes, you must be in Puerto Rico for at least 3 years in order to reap the benefits of Act 60 and minimize your risk. This article will walk you through the

With the IRS intensifying its focus on cryptocurrency tax collection, many are searching for ways to reduce their crypto tax burden. For certain individuals and businesses, Puerto Rico could be the ideal tax-friendly solution. Puerto Rico’s Act 60 offers particularly attractive tax incentives for crypto investors, potentially saving taxpayers hundreds of thousands—or even more—in federal

“In America, there are two tax systems; one for the informed and one for the uninformed. Both systems are legal…” Judge Learned Hand From my clients, I constantly hear reasons not to fully realize the benefits available in the Internal Revenue Code. “It’s too good to be true!” “If this was real, everyone would know

I constantly am asked about the tax implications for an Act 60 company owner who wants to spend the summer abroad with family while working remotely. This article will use a hypothetical case study to explore the considerations for Act 60 business owners working from abroad, highlighting the importance of careful planning to avoid significant

Taxable Income – Gross Income Minus Deductions In the U.S., income tax is typically applied to taxable income, which is defined as gross income minus allowable deductions. Exempt or Excluded Income and Associated Expenses Certain types of income can be excluded from taxable income under U.S. tax law. Specifically, bona fide residents of Puerto Rico

A bona fide resident of Puerto Rico is generally allowed to exclude “income derived from sources within Puerto Rico” from U.S. taxable income. Since only Puerto Rican-sourced income qualifies for this exclusion, it is essential to distinguish which types of income are, and are not, considered Puerto Rican-sourced. The classification of income source varies by

Question: If a U.S. citizen establishes a Puerto Rican corporation (or a Puerto Rico LLC taxed as a corporation for U.S. tax purposes) and contributes capital to the entity, is the individual required to notify the IRS? Answer: Yes, the U.S. citizen is considered a U.S. person, and the Puerto Rican entity is classified as

Bona Fide Resident of Puerto Rico To qualify as a bona fide resident of Puerto Rico, an individual needs to meet three main criteria: (i) the presence test, (ii) the tax home test, and (iii) the closer connection test. Let’s consider an example. Sarah, a U.S. citizen living in Massachusetts, works for a private equity