Filing income taxes for income earned outside PR?

Most of the members are in similar position. Some work remote like you while others are retired getting SSI, some other pension or and IRA or 401k distribution.
If you work for a US company they are taking federal taxes. If that company does not have offices in PR then you should have no issue. All your income comes from a US company.
You pay only federal tax unless PR becomes a state sometime down the road.

How about an individual like myself moving from CA to PR with an invested income along with Social Security, do I pay federal taxes while living in PR?

I am not an expert, but what do you mean by invested income?
You will pay federal on the Social Security, and probably the invested interest what ever that is. The basic rule is that if the money comes from the states or holdings or investments in the states thenFederal and no PR. If you are talking about investments in PR or thru a PR account or a business in PR then all depends.

You can call the IRS and ask questions, you don't have to give a name.
There is Act 20 and Act 22 that deal with Investments in PR and creating a local business for export that you have to apply for that lets you pay minimal PR taxes and eliminate Federal on those investments but it is something you have to apply for and be accepted.

ReyP wrote:

I am not an expert, but what do you mean by invested income?
You will pay federal on the Social Security, and probably the invested interest what ever that is. The basic rule is that if the money comes from the states or holdings or investments in the states then Federal and no PR. If you are talking about investments in PR or thru a PR account or a business in PR then all depends.

You can call the IRS and ask questions, you don't have to give a name.
There is Act 20 and Act 22 that deal with Investments in PR and creating a local business for export that you have to apply for that lets you pay minimal PR taxes and eliminate Federal on those investments but it is something you have to apply for and be accepted.

This sentence answered my question. What I meant about invested income is income from an investment.

If you have an IRA or 401k or 403b you will pay federal taxes when you get some out, not PR taxes. If you have an after tax account then you can sign up for act 22 and transfer your money to PR then you pay 4%  PR tax and no Federal on that money. You can always convert your 401k and other pretax accounts but the federal tax during the conversion may make it not worth it, talk to tax advisor on that, I. Just provide you with generalities.

I have an IRA and will have Social security (once I appply for it), as long as I don't take out money from IRA I pay nothing on that money. Mean time I am working and may do some consulting when I retire. So my plan is SSN + Consulting fees which will pay PR tax on consulting fees. I will also Airbnb part of the house and that will pay PR tax. I do not plan to take anything from my IRA until forced to do that at 70 1/2.

Here's the relevant portion of IRS Form 570, which addresses these tax questions.  A link to the form is at the very bottom of this post:

Which Returns To File
Generally, you will file returns with both Puerto Rico and the United States. The income reported on each return depends on your residency status in Puerto Rico. To determine if you are a bona fide resident of Puerto Rico, see the information in chapter 1 .

Bona Fide Resident of Puerto Rico
Bona fide residents of Puerto Rico will generally pay tax to Puerto Rico on their worldwide income.

U.S. citizen or resident alien.   If you are a U.S. citizen or resident alien and also a bona fide resident of Puerto Rico during the entire tax year, you generally must file the following returns.
A Puerto Rico tax return reporting income from worldwide sources. If you report U.S. source income on your Puerto Rico tax return, you can claim a credit against your Puerto Rico tax, up to the amount allowable, for income taxes paid to the United States.

A U.S. tax return reporting income from worldwide sources, but excluding Puerto Rico source income. However, see U.S. Government employees under Special Rules for Puerto Rico, later, for an exception.

If you are excluding Puerto Rico income on your U.S. tax return, you will not be allowed any deductions or credits that are directly or indirectly allocable to exempt income. For more information, see Special Rules for Completing Your U.S. Tax Return in chapter 4.

If all of your income is from Puerto Rico sources, you are not required to file a U.S. tax return. However, if you have self-employment income, see Self-employment tax , later.

U.S. citizen only.   If you are a U.S. citizen, you may also qualify under these rules if you have been a bona fide resident of Puerto Rico for at least 2 years before moving from Puerto Rico. In this case, you can exclude your income derived from sources within Puerto Rico (but not wages and salaries received as an employee of the U.S. Government or its agencies) that you earned before the date you changed your residence. For more information, see Puerto Rico under Year of Moving From a Possession in chapter 1.
Nonresident alien.   If you are a bona fide resident of Puerto Rico during the entire tax year, but a nonresident alien of the United States, you generally must file the following returns.
A Puerto Rico tax return reporting income from worldwide sources. If you report U.S. source income on your Puerto Rico tax return, you can claim a credit against your Puerto Rico tax, up to the amount allowable, for income taxes paid to the United States.

A U.S. tax return (Form 1040NR) reporting income from worldwide sources, but excluding Puerto Rico source income (other than amounts for services performed as an employee of the United States or any of its agencies). For tax purposes other than reporting income, however, you will be treated as a nonresident alien individual. For example, you are not allowed the standard deduction, you cannot file a joint return, and you are not allowed a deduction for a dependent unless that person is a citizen or national of the United States. There are also limitations on what deductions and credits are allowed. See Publication 519 for more information.

Self-employment tax.   If you have no U.S. filing requirement but have income that is effectively connected with a trade or business in Puerto Rico, you must file Form 1040-SS or Form 1040-PR with the United States to report your self-employment income and, if necessary, pay self-employment tax.
Additional Medicare Tax.   You may be required to pay Additional Medicare Tax. Also, you may need to report Additional Medicare Tax withheld by your employer. For more information see Additional Medicare Tax under Special Rules for Completing Your U.S. Tax Return in chapter 4.
Net Investment Income Tax.   The Net Investment Income Tax (NIIT) is 3.8 percent of the lesser of an individual’s net investment income or the excess of the individual’s modified adjusted gross income over a specified threshold amount. The NIIT will apply to a bona fide resident of Puerto Rico if a taxpayer has modified adjusted gross income from sources outside of Puerto Rico that exceeds a specified threshold amount, e.g., $200,000 for single filers. The NIIT does not apply to any individual who is a nonresident alien with respect to the United States. See Form 8960 and its instructions for more information on the NIIT.
Estimated tax payments.   To see if you are required to make payments of estimated income tax, self-employment tax, Additional Medicare Tax, and/or Net Investment Income Tax to the IRS, get Form 1040-ES (or Form 1040-ES(PR)).
  To pay by check or money order, send your payment with the Form 1040-ES (or Form 1040-ES(PR)) payment voucher to:
Internal Revenue Service
P.O. Box 1300
Charlotte, NC 28201-1300
USA

  To get information on paying electronically (by credit or debit card, or through the Electronic Federal Tax Payment System (EFTPS)), go to www.irs.gov/payments.
  For information on making estimated income tax payments to Hacienda, see Where To Get Forms and Information , earlier.


Link to the online document:

https://www.irs.gov/publications/p570/c … 1000221272

ReyP wrote:

If you have an IRA or 401k or 403b you will pay federal taxes when you get some out, not PR taxes. If you have an after tax account then you can sign up for act 22 and transfer your money to PR then you pay 4%  PR tax and no Federal on that money. You can always convert your 401k and other pretax accounts but the federal tax during the conversion may make it not worth it, talk to tax advisor on that, I. Just provide you with generalities.

I have an IRA and will have Social security (once I appply for it), as long as I don't take out money from IRA I pay nothing on that money. Mean time I am working and may do some consulting when I retire. So my plan is SSN + Consulting fees which will pay PR tax on consulting fees. I will also Airbnb part of the house and that will pay PR tax. I do not plan to take anything from my IRA until forced to do that at 70 1/2.

Act 22 is 0% on cap gains Rey. You're confusing it w/ Act 20, which is 4% on exported services.