Form 499-R-1C (Adjustments to Income Tax Withheld Worksheet) Form 499R2/W2PR (Withholding Statement) - This withholding statement is the Puerto Rico equivalent of the U.S. Form W2 and should be prepared for every employee.
If you are not a bona fide resident of Puerto Rico during the entire tax year, you will instead file the following returns:
- A Puerto Rico tax return (Form 482) reporting only your income from Puerto Rico. Wages for services performed in Puerto Rico, whether for a private employer, the U.S. Government, or otherwise, is income from Puerto Rico.
- A U.S. tax return (Form 1040) reporting all worldwide income. If you are double taxed by both the U.S. and Puerto Rico, you can claim a foreign tax credit on Form 1116 for the income taxes paid to Puerto Rico.
Since you are not considered a bona fide resident of Puerto Rico, you want to prepare the Puerto Rico return first if possible. This is to determine the US Credit. Your credit is not based on tax withheld, but rather your tax withheld minus refund or in addition to additional tax due. To prepare the return for Puerto Rico, you might want to visit this website as the Puerto Rico return is not supported in TurboTax.
Per IRS Publication 570 if you are a U.S. citizen or resident alien:
If you are a U.S. citizen or resident alien but not a bona fide resident of Puerto Rico during the tax year, you must generally file the following returns:
A Puerto Rico tax return reporting only your income from Puerto Rico sources. Wages for services performed in Puerto Rico, whether for a private employer, the U.S. government, or otherwise, are income from Puerto Rico sources.
A U.S. tax return reporting income from worldwide sources. Generally, you can claim a foreign tax credit for income taxes paid to Puerto Rico on the Puerto Rico income that is subject to Puerto Rico taxes and not exempt from U.S. taxes (see chapter 4 for more information).
Click here for Pub 570.
Click here for additional information of Puerto Rican Income.
Also, consider clicking here for information on Turbo Tax Support. You can connect with a Live TurboTax Agent and will have the option to share your screen.
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