Asked in Tax Law for Puerto Rico

Q: I’m a 1099 NEC that work for company in Florida remotely from my home in PR. Do I have to pay taxes to IRS as well as PR

I filed taxes from prior year and got a notice saying I have to file in PR and pay taxes as well.

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1 Lawyer Answer
James L. Arrasmith
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  • Tax Law Lawyer
  • Sacramento, CA

A: As a resident of Puerto Rico who is working remotely for a company based in Florida, you generally have to pay taxes to both the IRS and the Puerto Rico tax authorities. Here's what you should know:

1. Federal Income Tax: Puerto Rico residents are required to file a U.S. federal income tax return if they are self-employed or have income from sources outside of Puerto Rico. As a 1099 contractor, you will need to file a Form 1040-SS (self-employment tax return) with the IRS.

2. Puerto Rico Income Tax: You must also file a Puerto Rico income tax return and pay taxes to the Puerto Rico Department of the Treasury (Hacienda) on your worldwide income, including the income earned from the Florida-based company.

3. Foreign Earned Income Exclusion: If you qualify for the Foreign Earned Income Exclusion (FEIE), you might be able to exclude some of your income from your U.S. federal tax return. However, this exclusion does not apply to self-employment tax.

4. Tax Credits: To avoid double taxation, you may be able to claim a foreign tax credit on your U.S. federal income tax return for the taxes paid to Puerto Rico.

It's essential to consult with a tax professional familiar with both U.S. and Puerto Rico tax laws to ensure that you are filing your tax returns correctly and taking advantage of any available tax credits or deductions. They can help you navigate the complexities of your specific tax situation.

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