Taxes

The short answer is that you pay taxes where you earn the income.

If you move to PR, you pay PR taxes on income earned in PR (which won't be the case for you), and federal taxes on income earned outside of PR.  This latter would include investment income.  So depending on the types of investments you have, and the amount of investment income you earn, you may have to file (and pay) federal income tax on your retirement income.

I agree that Act 20/22 is insanely complicated.  I recall reading through it, and when I got to the examples, they made no sense whatsoever.

I posted the IRS form on this a few months ago -- I'll see if I can find it again.

This isn't the IRS publication that I posted elsewhere, but it's mostly on your topic, and has links to even more IRS information that could prove useful.

Thank you! But "no taxation without representation"; so if my permanent address is PR.... ???
This is so hard b/c US cpa's know 0 re: PR.

If you live from Jan. 1 to Dec. 31 (the entire tax year) and you only earn income in PR (which will not apply to you), then you do not have to file a federal return.  You will however pay PR income taxes.

If you live in PR and earn income off-island (such as investment income), then you may have to file a federal return.  This will depend first on the nature of your investments (e.g. Roth IRAs are untaxed), and secondly on the amount of investment income you earn (whether you reach the income limit to file).

Don't get hung up on the issue of representation.  What is taxed is your income, and if you earn that income in the U.S., the federal government is going to tax it, regardless of where you live.

A couple of twist
That house in the states may give you problems with residency requirements. I R S may give you a hard time since you have property in the states that you may be renting and as such Uncle Sam wants a piece of that action

Also you have property taxes on that property, and you may also may need to pay state taxes since you could be considered a resident of CT.

Having a home in the state may complicate act 20/22 application as you have to become a resident of PR.

WarnerW is right, if the money comes from the states, you pay Federal, if you get social security you pay Federal. If you make money in PR from a business, or job, or rental property, or anything else, you pay PR taxes.

Those with mixed incomes pay both, but because PR for taxation is another country, the US and PR give you credit for taxes payed to the other.

A good number of Expats that are retired only pay Federal and no state or PR tax.
Get a tax expert it is worth the money for the first and second year as you are not yet stable resident of one or the other and the root of your income changes.

As I have heard money in a Roth IRA or other post tax account has to be moved to a PR brokerage to take advantage of the low taxation. I could be wrong.

There is an act 20/22 group in Facebook that may help you more.

I have been living with my wife in Puerto Rico for 4 and half years now. I am not a CPA but I do my own taxes. Since my income comes from my retirement account and the Federal Government, I have been filing Federal Taxes, exclusively. I believe your case would be similar since you are not deriving income from Puerto Rico in any way. Hell, they already tax the hell out of us here between the IVU, gasoline, tolls, etc. I hope this helps. When you establish yourself here in Puerto Rico my wife and I would love to meet you. Have a great day!