I provided service for a Company in Puerto Rico and just received a form 480.6C and would like to know how to input the information here in Turbo Tax.

[gvp2614]

I thought I would receive a 1099 form but received this form 480.6C (Payments to nonresidents or for services from sources outside of Puerto Rico)  and don't know in which session I should upload the amounts.

[DianeW777]

No worries, it can be entered easily. Form 480.6C is intended for non-residents of Puerto Rico. Since this was for services you performed you should enter the income as self employment using Schedule C. You do not need to enter the document itself.

Follow the steps here to enter your income without using the Form 480.6C.

• Open your TurboTax return > Search (upper right) > Type schedule c > Press enter > Click the Jump to link.
• Select to Edit beside your business (or add) > Select Income > Select Other self-employed income, includes 1099-K and cash...
• Enter the total proceeds from your Form 480.6C
• Continue to complete your self employment income and expenses

[gvp2614]

When I go to this option, it doesn't allow me to enter the Tax paid. How to do it? Thanks.

[gvp2614]

I have the amount paid and the amount withheld to enter... (line 2 of the 480.6C form)

[DianeW777]

You must file a tax return for Puerto Rico since you are not a bona fide resident for 2021, along with a US tax return.  The foreign tax credit allowed on your US return will provide a credit for the tax you paid Puerto Rico by reducing your total tax.

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. Self employment 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.

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.  

TurboTax does not support a Puerto Rico return. You will have to prepare your return from the Puerto Rico website. It is in Spanish but most computer software offers a translation if needed.

• Where do I enter the foreign tax credit (Form 1116)?

Publication 570 from the IRS will give you more information about this.  Please update here if you need further assistance.

[gvp2614]

Hello, I started a conversation with PR advisors and they are saying me the form 480.6C is only for residents of PR and therefore I don't need to fill in a PR income tax. My question is: What's the problem if I don't fill in PR income Tax? Is it just related to the credit Tax amount? Any other inconvenience? Thanks.

Doubt: How's about as an alternative, I enter the amounts from form 480.6C as an income gained abroad?

[RobertB4444 · Accepted solution]

There aren't really any consequences for not filing a Puerto Rican return - other than you lose the money.  The with holding from your 480.6C was sent to the Puerto Rican government.  If you want that money back - whatever portion isn't actually owed to the Puerto Rican government - you have to file a Puerto Rican tax return regardless of what your Puerto Rican advisors say just like @DianeW777

But Americans choose to not file tax returns in Puerto Rico all the time.  It's why they with hold the taxes.  Means that you can't skip out on the bill.

You can just add the income from the 480.6C to your US tax return and call it a day.  But by doing so you are paying taxes on the same income twice as well as giving up a deduction for taxes paid to a foreign government.  

[gvp2614]

Thanks for the answer!

I did my PR income tax last Friday and was 2k refunded from the PR withheld tax.

The thing is that I filed my US income tax also last Friday and forgot to include this refunded tax from PR.

Question: Should I amend my filed US income tax and add this amount? If so, in which section/form do I have to enter this amount?

Thanks.

[DMarkM1]

Assuming you claimed a credit for the tax paid to PR on your original return then, yes, you will need to amend your return to net the refund and the foreign tax paid.  You will do that in the "Deductions & Credits" tab with the steps below.

If you did not go through the "Foreign Tax Credit" topic originally and thus did not claim the foreign tax credit, then you do not need to amend your return.  You can check line 20 on your original form 1040.  If there is an amount there, go to Schedule 3 to see if there is an amount on line 1, which comes from a form 1116.  If there is no Foreign Tax Credit and no form 1116, then you did not claim that credit. 

If you need to amend your return select the amend option when signing in to your account.  Then follow the prompts to complete the amendment forms.    

1. Scroll down to "Estimates and other taxes paid"
2. "Show More"
3. "Revisit" the "Foreign Tax Credit" topic
4. Click through to find the page "Country Summary" and "Edit" the PR line for "General Income"
5. Verify the income and deductions entered as you click through
6. Ultimately you will arrive at a page where you entered the tax paid to PR
7. You will need to subtract the refund from that amount

[gvp2614]

Hi DMarkM1, thanks for your reply!

Sorry, I am a little confused here.

I have no form 1040.

PR company only issued a local form 480.6C and I filed my PR income tax based on this form.

After filing in the PR income tax, I had a $2,000 withheld tax refund which will be made by a direct deposit in my checking account.

So, my question is if I should add this amount to the US income tax.

If so, in which form/section?

Thanks a lot for your attention and sorry for my lack of knowledge in this subject.

Best.

Marcelo.

[DMarkM1]

You posted you had already filed your US tax return as well.  The US tax return is a form 1040 and the accompanying schedules.  If you have not filed your US tax return (form 1040) then simply do not claim the foreign tax credit on your US return and you do not need to enter any refund received from PR. 

You will only be taxed by the US on your PR income since PR refunded everything.  

[gvp2614]

Ok, I added all the information from the PR income and tax and in terms of refunds/payments, nothing has changed.

The problem is that my new forms don't show my original US and CA refund amounts anymore. It shows 0.

Is that correct?

[DMarkM1]

Yes,  when you start the amend process the tax/refund may reset to zero.  However, if you have a zero at the end of the amend process then quite probably you did not claim Foreign Tax Credit originally. 

Do you remember going through that Foreign Tax Credit interview originally and putting in the tax withheld by PR?  If you did not claim that credit then you do not need to amend.

It would be part of an amount on line 20 of your form 1040 which flowed from line 1 on your schedule 3 that generated a form 1116. 

[gvp2614]

Actually, based on your previous instruction:

1. Ultimately you will arrive at a page where you entered the tax paid to PR
2. You will need to subtract the refund from that amount

Considering that I was refunded 100%, there was no tax paid to PR so I went through that Foreign Tax Credit and entered 0 amount therefore I couldn't claim any credit.

As a result, only the income was added.

My doubt is: Although I see 0 amount, my original refund amounts are still valid, right?

Thanks.

[DaveF1006]

Yes, you should receive the original refund amount since you have no Puerto Rican taxes to subtract from.

@gvp2614