For individuals who have relocated to Puerto Rico under Act 60, establishing and maintaining bona fide residency is essential to securing the program’s tax benefits. A key component of this process is passing the Presence Test, which ensures that an individual is spending a sufficient number of days in Puerto Rico while avoiding tax residency

A new investment visa program, commonly referred to as the “Gold Card,” is poised to reshape the landscape for high-net-worth individuals seeking U.S. residency. In late February 2025, President Trump mentioned that he is planning to institute this “Gold Card” policy. This initiative, which requires a $5 million investment to get permanent US residency, presents

Over a decade ago, Puerto Rico faced economic instability and sought innovative solutions to stimulate investment and economic activity. One of the key measures introduced was the Research & Development (R&D) tax credit under the Puerto Rico Incentives Code which offers up to 50% back on qualifying R&D investments . This initiative aims to attract

On December 17, 2024 the IRS issued an important memorandum highlighting critical issues concerning the sourcing of gains for bona fide residents of Puerto Rico. Navigating the complexities of Act 60 compliance requires staying informed about IRS rulings that could impact your tax strategy. The recent IRS Advice Memorandum 2024-005 (AM 2024-005) highlights critical issues

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

A common question arises among Act 60 business owners: what are the tax implications of spending part of the year working remotely from abroad? This article examines a hypothetical case study to highlight the critical considerations for Act 60 entrepreneurs, emphasizing the need for strategic planning to avoid significant tax and legal complications. Background: Joe,

Taxable Income: Gross Income Minus Deductions In the U.S., income tax applies to taxable income, which is calculated as gross income minus eligible deductions. Exempt or Excluded Income and Related Expenses Certain types of income, such as Puerto Rican-source income earned by bona fide residents of Puerto Rico, can be excluded from U.S. taxable income.

A bona fide resident of Puerto Rico may generally exclude income derived from Puerto Rican sources from U.S. taxable income. Since only income sourced within Puerto Rico qualifies for this exclusion, it’s crucial to understand which types of income are considered Puerto Rican-sourced and which are not. The rules for sourcing income differ depending on

Question: If a U.S. citizen forms a Puerto Rican corporation (or Puerto Rico LLC classified as a corporation for U.S. tax purposes) and contributes capital, is IRS notification required? Answer: Yes. A Puerto Rican entity is treated as a foreign corporation, so U.S. citizens contributing capital must file Form 926, Return by a U.S. Transferor

Bona Fide Residency in Puerto Rico To qualify as a bona fide resident of Puerto Rico, an individual must satisfy three primary tests: the presence test, the tax home test, and the closer connection test. Illustrative Example: Sarah’s Journey to Residency Sarah, a U.S. citizen from Massachusetts, works at a private equity firm. Married with