PUERTO RICO ACT 60

Act 60 lives or dies on your day record

Puerto Rico's Act 60 can take tax on Puerto Rico-source income and certain gains close to zero, but only if you are a bona fide resident of Puerto Rico under federal law. The IRS is auditing these claims actively, and the day count is the first thing they check.

Three tests, all required

Bona fide residency under IRC 937 and IRS Publication 570 has three parts, all of which must be met for the entire tax year:

• Presence test (the day count, below).
• Tax home test: your main place of business or work is in Puerto Rico, not outside it.
• Closer connection test: your ties to Puerto Rico are closer than your ties to the US mainland.

The presence test: five ways to pass

You satisfy the presence test if you meet any one of these:

• Present in Puerto Rico at least 183 days during the tax year, or
• At least 549 days over a three-year period (current plus the two prior years), with at least 60 days in Puerto Rico in each year, or
• Present in the United States for no more than 90 days during the tax year, or
• Under $3,000 of US earned income and more days in Puerto Rico than in the US, or
• No significant connection to the US during the tax year.

A day counts if you are present in Puerto Rico for any part of it. The 183-day path is the most commonly used, which is why relocators often aim to arrive before roughly July 1 to accumulate 183 days by year end.

Why passing the day count is not the finish line

The IRS has an active enforcement campaign on Act 60 beneficiaries, and audits are usually won or lost on the tax-home and closer-connection tests, not the raw presence count. But the presence count is the foundation the rest stands on, and it is the one piece you can prove cleanly if, and only if, you kept a contemporaneous record. Reconstructing days from memory or flight receipts years later is exactly the weak evidence auditors probe.

How SpyglassBeacon helps

Beacon builds a timestamped, day-by-day record of your presence in Puerto Rico versus the mainland automatically, and exports it as a defensible report. It gives you the contemporaneous evidence the presence test rewards, and a running view of your US-day and Puerto Rico-day totals so you know where you stand all year, not at filing time.

Related: Snowbirds & state movers · Substantial Presence Test calculator