DanielV01
Expert Alumni

Get your taxes done using TurboTax

You will file a United States Resident Return (Form 1040), and a North Carolina Non-Resident Return.  You will not need to file a Puerto Rico return unless you have earned income inside of Puerto Rico.  Here's why:

 

Special Rules exist between the United States and Puerto Rico.  Although the Commonwealth of Puerto Rico is a Possession of the United States, from a taxation standpoint it is not treated as a state, but rather as a foreign country.  The United States normally requires a U.S. citizen to report all worldwide income on a U.S. tax return regardless of where the citizen is living or where the income is made.  (There are provisions to exclude a certain amount of income earned outside of the United States in qualifying circumstances, but that is not the situation in your case).  However, when a U.S Citizen establishes themselves as a bona fide resident of Puerto Rico, any income derived within Puerto Rico is excluded from United States taxation.  For argument's sake, we will say that you meet the definition of a bona fide resident of Puerto Rico (which is probably the case).  Regardless, you will need to file a United States Resident Return because your income does not come from Puerto Rico; it is earned within the United States.  (You file a U.S. Resident return because you are a U.S. Citizen; where you live does not matter in this case).  Follow the following link for additional information: IRS Topic 901

 

What about Puerto Rico?  The same agreement that provides that you would not need to file a U.S. tax return based on Puerto Rico income also provides that if you have to file a Puerto Rico return, you will exclude U.S. income from the tax return.  Since TurboTax does not support Puerto Rico tax return filing, you may wish to contact the Puerto Rico Departamento de Hacienda (phone number at top of the page, the page itself is in Spanish), to see if you are required to file a tax return in Puerto Rico or not.  Should you have to file, and your situation is as you described (all income derived from the United States), you shouldn't owe any tax to Puerto Rico.

 

As far as North Carolina is concerned, the income is derived from within North Carolina, so they are allowed to tax that income.  If you did not live at all inside of North Carolina, it is considered nonresident income.  If you moved from North Carolina to Puerto Rico in 2019, you may file a part-year return to indicate the date you moved out of North Carolina.  Either way, all of the income will be taxed in North Carolina.

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