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Puerto Rico Tax

Forum|Forum|6 years ago
February 4, 2020
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My employer gave me a 499-R/W-2PR and a US W-2 for the same taxable income earned in Puerto Rico as a non-resident.

How do I file my 1040 so that the IRS does not double tax the wages on both forms since reported twice. OR is the 499-R and US W-2 incorrect?

I understand I first file a PR tax return and then on the US return I file for a foreign tax credit for taxes paid to Puerto Rico. But last time this happened the IRS sent me a notice that doubled my income and came looking for more US taxes. Thank you @DanielV01

Not A Product Question

Best answer by klehnhardt

If the income on the 499-R and the W-2 is the same income but reported on both forms you do not enter the 499-R on the U.S Form 1040. Doing that you would be doubling the amount of income.

If you are a Bona Fide resident of Puerto Rico per the Bona Fide Residence Test you can exclude income under the Foreign Earned Income Exclusion provision in the tax law.

If you are not a Bona Fide resident of Puerto Rico you can take the Foreign Tax Credit.

Also see this article. Posting a 499r.

JohnB5677

Everything you said is correct. The only adjustment I would make is in how you file the Federal W-2. To enter Foreign Earned Income -

Click on Federal Taxes (Personal using Home and Business)
Click on Wages and Income (Personal Income using Home and Business)
Click on I'll choose what I work on (if shown)
Scroll down to Less Common Income
On Foreign Earned Income and Exclusion, click on the start or update button

Also see this article. Posting a 499r

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M

michaeldtampaAuthor

Will the IRS look at the 499-R as income and also the US W-2 as income and double tax me? Do I not report the 499-R income on the US 1040 return and only include the US W-2 income as foreign income? Thank you,

K

klehnhardtAnswer

If the income on the 499-R and the W-2 is the same income but reported on both forms you do not enter the 499-R on the U.S Form 1040. Doing that you would be doubling the amount of income.

If you are a Bona Fide resident of Puerto Rico per the Bona Fide Residence Test you can exclude income under the Foreign Earned Income Exclusion provision in the tax law.

If you are not a Bona Fide resident of Puerto Rico you can take the Foreign Tax Credit.

Also see this article. Posting a 499r.