Puerto rico presence test Form 2023-2024

Puerto rico presence test Form: What You Should Know

The IRS has stated that the “significant” US connection test is met if the individual meets both the presence/substantial presence test and an exemption provision (such as the presence test).  Example—exemption provision applied.  Additional Examples: If you are engaged in some type of business activity in Puerto Rico, you will be able to exclude from Puerto Rico income from that business activity if you are deemed by the IRS to be a bona fide resident in Puerto Rico. There is one significant exception: if you are a resident foreigner who has acquired Puerto Rican property in one of the three main ways listed in Publication 560 (the tax home test).  There are other exclusions and exceptions. The major exceptions to meeting the substantial presence test is that: You are an independent contractor living with your principal. You reside with your principal. You receive income or qualified dividends from a partnership (or corporation) in Puerto Rico. See Publication 560 for more information about the substantial presence requirement, including the exceptions. The Tax Home Test for Puerto Rico Resident The tax home test measures the geographic proximity of the taxpayer to a specified point on the island. This test may also be satisfied at the same time as meeting a place of business test.  The general rules for the tax home test for Puerto Rico residents are: The tax home test need not be met in order to avoid U.S. taxation in Puerto Rico. The tax home test may be satisfied by filing a tax return with Puerto Rico, filing a separate Puerto Rican tax return, or by establishing a Puerto Rico tax home on Form RR-1 or Form RR-5. Tax Home Test for Puerto Rico Nonresidents (Form 466-U) Nonresidents of Puerto Rico (Form 466-U) have two additional requirements: First, the nonresident must have a residence in Puerto Rico at the time he or she files his or her tax return. Second, the nonresident must meet the tax home test that is tested on Puerto Rico tax returns.

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