Puerto Ricans are already U.S. citizens!
(territory of the US with commonwealth status)
Puerto Ricans were granted US citizenship in 1917.
Residents of Puerto Rico
"Income you receive from Puerto Rican sources during your residence in
Puerto Rico is exempt from U.S. tax. This includes income for the
period of Puerto Rican residence in the year you change your residence
from Puerto Rico if you resided there at least 2 years before the
change. However, income you receive for services performed in Puerto
Rico as an employee of the United States is not exempt from U.S.
Puerto Rico Estate Taxes
Puerto Rico's estate tax system exempts $400,000 from the net taxable
estate of a resident decedent. The remaining amount in the estate is
taxed at the following rates: [see table]
Tax Forms & Info
"While residents of the island do not pay federal income tax, Puerto
Ricans do pay U.S. federal payroll taxes (Social Security and
Medicare). Puerto Rico residents are eligible for Social Security
benefits upon retirement. Puerto Rico is excluded from Supplemental
Security Income (SSI). Because Puerto Ricans do not pay federal income
tax, Puerto Rico receives less than 15% of the Medicaid funding it
would be alloted as a state. For Medicare, Puerto Rico pays fully but
only receives partial benefits."
Who Must File
Use the following worksheet to determine if you have to file a U.S.
income tax return:
Who Must File Worksheet for Bona Fide Residents of P.R. with exempt
income (under Section 933)
"The regulations provide that a gain from a disposition of certain
property by a U.S. citizen or resident who becomes a bona fide
resident of a possession and owned the property on the date they
became a bona fide resident may NOT be treated as from sources within
a possession. This special gain rule (SGR) applies to disposition of
certain personal property like stocks, bonds, debt instruments, and
other investment property like diamonds or gold, which is held for
investment, and that is sold within 10 years of the date that the
individual became a bona fide resident of the possession. Because
these gains are treated for U.S. income tax purposes as from sources
not within Puerto Rico, this income may not be excluded under IRC
§933. However, individuals generally may claim a foreign tax credit
for income tax paid to Puerto Rico on such gain.
Departamento de Hacienda
I was glad to work on this for you. If you have any questions, please
post a clarification request and wait for me to respond before
closing/rating my answer.
Google Search Terms Used: puerto rico estate tax income resident citizenship