Amervim Bonano – BONN LLC

Are You Ready for an IRS Audit as a Puerto Rico Resident Under Act 60?

Leave a Comment / Uncategorized / By Amervim Bonano

Moving to Puerto Rico to take advantage of the benefits under Act 60 can be a game-changer for entrepreneurs, investors, and professionals. But with the IRS increasing its focus on residency and sourcing of income, residents must be prepared for a potential audit. At BONN LLC, we help our clients stay audit-ready by keeping clear evidence of both residency and Puerto Rico–source income. To make it easier, we created an IRS Audit Preparation Checklist that covers everything the IRS looks for. Key Areas the IRS Reviews Here are the four main categories you should always be prepared to document: 1. Tax Returns & Financial Documents Keep complete copies of Puerto Rico and U.S. tax returns (with all schedules), Forms 1099 / 480, transfer pricing studies, and evidence that your income truly originates in Puerto Rico. 2. Presence Test The IRS will want proof you’ve spent 183+ days in Puerto Rico (or qualify under other rules). Examples: flight tickets, boarding passes, hotel receipts, phone records, and daily planners. 3. Tax Home Test Your primary place of business and home must be in Puerto Rico. Documents like leases, real estate purchase contracts, and moving invoices are key. 4. Closer Connection Test Show that your life is centered in Puerto Rico. Evidence includes property records, Puerto Rico driver’s license, voter registration, insurance policies, banking activity, charitable giving, and memberships in local organizations. Download the Full Checklist We’ve compiled all of these requirements (with examples of acceptable documents) in a comprehensive Word checklist.👉 Download the IRS Audit Preparation Checklist Final Thoughts The IRS has already launched audit campaigns targeting Act 60 residents. Don’t wait until you get a letter—start gathering your documentation today. At BONN LLC, we specialize in helping individuals and businesses navigate the IRS rules, maintain compliance, and protect their Puerto Rico tax benefits. 📞 Phone: 787-473-8985📧 Email: [email protected] ✅ Share the Knowledge:If you found this checklist useful, please forward it to a friend or colleague who has also relocated to Puerto Rico or is considering it. A little preparation goes a long way in avoiding big headaches later.

Navigating Act 60 Revocation Risks in Puerto Rico

Leave a Comment / Compliance, Tax Incentives, Tax Tips, Taxes / By Amervim Bonano

Act 60 (now Act 60-2019) provides attractive tax incentives for businesses and individuals relocating to Puerto Rico, but maintaining compliance is crucial. Revocation of these benefits can have significant financial implications. Below, we outline the primary reasons for revocation, based on official guidelines from the Department of Economic Development and Commerce (DDEC) and related regulations. 1. Non-Compliance with Decree Terms, Laws, or Regulations Any violation of the specific conditions outlined in your incentive decree, or failure to adhere to Puerto Rican tax laws, environmental regulations, or other applicable statutes, can result in immediate revocation. This includes operational changes that deviate from approved activities without prior authorization. 2. Failure to Maintain Compliance Non Compliance, jeopardize ongoing eligibility. Allowing it to lapse due to unmet requirements, such as annual filings or audits, directly triggers revocation proceedings. 3. Unauthorized Transfer of Business, Stock, or Assets Selling, transferring, or restructuring ownership, shares, or key assets without explicit approval from the DDEC or relevant authorities can void the decree. This safeguard ensures continuity and prevents abuse of incentives through unauthorized changes in control. 4. Failure to Commence Operations Within Specified Period Your decree typically requires starting eligible export services, manufacturing, or other qualified activities within a set timeframe, often 6-12 months. Delays beyond this period, without an approved extension, lead to automatic revocation. 5. Tax Liability Non-Compliance Failing to fulfill tax obligations, including timely payment of any non-exempt taxes, accurate reporting, or resolving audits satisfactorily, can prompt revocation. This encompasses both Puerto Rican and potential U.S. federal tax compliance issues. 6. Failure to Submit Annual Reports Annual reports to the DDEC, detailing operations, employment, and financials, must be filed by specified deadlines (usually July 15). Missing these submissions, or providing incomplete/inaccurate information, is a common cause for decree termination. 7. Sector-Specific Failures Certain decrees have tailored requirements: for example, export services must maintain job creation quotas; physicians under resident incentives must practice full-time in Puerto Rico; farmers need to sustain eligible agricultural activities. Falling short, such as reducing workforce below thresholds or ceasing qualified operations, results in revocation. To mitigate these risks, businesses should implement robust compliance monitoring, consult experts regularly, and stay updated on regulatory changes. Proactive adherence preserves the valuable tax benefits of Act 60. Contact Us For assistance with your compliance or to schedule a consultation, feel free to reach out to us: We’re here to help you navigate this procedure of moving down here and ensure you remain compliant while maximizing your benefits! Disclaimer:The information provided is for informational purposes only and should not be considered legal or tax advice.

Hard-to-Recruit Professionals tax incentive in Puerto rico

Frequently Asked Questions on Section 2021.02 of Law 60-2019 for Hard-to-Recruit Professionals

Leave a Comment / Uncategorized / By Amervim Bonano

IntroductionUnder Section 2021.02 of Law 60-2019, hard-to-recruit professionals who provide essential knowledge and skills for the operations of an exempt business can access tax benefits. This section aims to attract highly qualified individuals crucial to the business’s success. The filing fee for Professionals of Difficult Recruitment under Act No. 60-2019, Section 2021.02, is $3,000.00. Below are the benefits and answers to common questions to maximize tax advantages. 1. What are the tax benefits for hard-to-recruit professionals? Hard-to-recruit professionals may enjoy: 2. What tax credits or benefits can my business obtain by hiring new workers? If your business hires hard-to-recruit professionals, you may benefit from: 3. Are there benefits for investing in equipment or properties? Yes, by investing in equipment or properties, you can obtain: 4. Can I save on taxes by making my business more eco-friendly? If the hired professional develops eco-friendly solutions, you may benefit from: 5. What additional tax benefits can my business type enjoy? Including investors. In addition to benefits for hired professionals, your business and investors may enjoy: 6. Do I qualify for additional benefits if I operate in a specific zone or area? Yes, if your business is in a priority economic development zone or opportunity zone in Puerto Rico: 7. What is available for research or innovation expenses? If the professional is involved in research or innovation: 8. Are there tax exemptions for expanding or relocating my business? Yes, if you expand or relocate your business in Puerto Rico, especially in key areas: 9. How can I benefit from exporting goods or services? If your business exports goods or services reliant on hard-to-recruit professionals: 10. Which professionals might qualify as hard-to-recruit? Professionals who might qualify include those with essential and hard-to-find skills in Puerto Rico, such as: 11. Can professionals in construction advertising or goldsmithing qualify? Yes, they could qualify if: For those considering this opportunity, it’s crucial to be thoroughly informed and prepared to comply with all stipulations to fully benefit from Act 60. Should you require additional guidance or have specific inquiries, seeking tailored professional advice is highly recommended. For further assistance or more information, please feel free to contact us at [email protected] or 787-473-8985. Disclaimer: The information provided herein is for informational purposes only and should not be construed as legal or tax advice

Best Practices for Self-Auditing Tax Compliance When Moving from the USA to Puerto Rico

Leave a Comment / Doing Business, Relocation, Tax Incentives, Tax Tips, Taxes / By Amervim Bonano

Relocating from a U.S. state to Puerto Rico to take advantage of tax incentives, such as those under Act 60, requires careful planning to ensure compliance with IRS requirements for bona fide residency. To qualify as a bona fide resident of Puerto Rico, you must satisfy three tests: the Presence Test, Tax Home Test, and Closer Connection Test. Conducting a self-audit before an IRS or state residency audit can help you confirm compliance and avoid costly penalties. Below is a checklist of best practices to guide your self-audit process, tailored to these tests. Why Self-Audit? A self-audit helps you: Checklist for Self-Auditing Compliance 1. Presence Test: Verify Physical Presence in Puerto Rico The Presence Test requires you to spend sufficient time in Puerto Rico to establish residency. You can meet this test in several ways, such as spending at least 183 days in Puerto Rico during the tax year or averaging 183 days over three years with a minimum of 60 days per year. Best Practices: 2. Tax Home Test: Establish Puerto Rico as Your Principal Place of Business The Tax Home Test requires that your regular or principal place of business be in Puerto Rico during the tax year, with no tax home outside Puerto Rico. Your tax home is generally where you conduct your income-producing activities. Best Practices: 3. Closer Connection Test: Demonstrate Stronger Ties to Puerto Rico The Closer Connection Test requires that you have a stronger connection to Puerto Rico than to the U.S. or any foreign country during the tax year. This is a facts-and-circumstances test based on your personal, financial, and social ties. Best Practices: 4. General Compliance and Documentation Beyond the three tests, additional steps ensure overall compliance and audit readiness. Best Practices: 5. Common Pitfalls to Avoid Final Recommendations By following this checklist, you can confidently establish and maintain bona fide residency in Puerto Rico, maximize tax benefits, and be well-prepared for any IRS or state audit. 📞 Contact Us For assistance with your compliance or to schedule a consultation, feel free to reach out to us: We’re here to help you navigate this procedure of moving down here and ensure you remain compliant while maximizing your benefits! Disclaimer:The information provided is for informational purposes only and should not be considered legal or tax advice.

3 Tax Exemptions You Should Know in Puerto Rico: Life Insurance, Gifts, and Injury Compensation

Leave a Comment / Tax Tips, Taxes / By Amervim Bonano

Did you know that not all income you receive in Puerto Rico is taxable? The Puerto Rico Internal Revenue Code offers exemptions that can save you money, but they come with specific rules. Today, we’ll dive into three common ones: life insurance payouts, gifts and inheritances, and compensation for injuries or illnesses. Here’s what they are, their limits, and when they apply (or don’t). Let’s get started! 1. Life Insurance: Is Your Payout Tax-Free? If you’re a beneficiary of a life insurance policy after a loved one passes away, good news: that money is usually exempt from income tax. Whether it’s $10,000 or $100,000, you don’t report it as taxable income. But there’s a catch. Tip: Keep the insurer’s payment proof for 6 years, even if you don’t submit it with your return. 2. Gifts and Inheritances: Tax-Free Goodies (Almost Always) Getting a cash gift, an inheritance, or property feels great—and it’s even better because it’s usually not taxed as income. The Code sees this as a wealth transfer, not earned income. Note: While income tax doesn’t apply, inheritances might face the Estate and Gift Tax, paid by the estate, not you. 3. Compensation for Injuries or Illnesses: Tax Relief in Tough Times If you receive money for a physical injury or illness—from an insurer, lawsuit, or otherwise—that payment is exempt. This includes some disability benefits tied to physical conditions. Tip: Keep medical certificates or legal agreements on file for 6 years. These exemptions can be a big help, but details matter. Missteps—like not separating interest from a life insurance payout—could lead to adjustments and penalties. If you’re unsure, check the Individual Income Tax Booklet from the Puerto Rico Treasury or consult a specialist. Disclaimer:The information provided is for informational purposes only and should not be considered legal or tax advice. Consult with a qualified attorney or tax advisor to discuss your specific situation.

Should You Be a 1099 Contractor or W-2 Employee Under Puerto Rico’s Act 60? A Comprehensive Guide

Leave a Comment / Compliance, Relocation, Tax Incentives, Tax Tips, Taxes / By Amervim Bonano

If you’re considering a move to Puerto Rico to take advantage of the tax incentives under Act 60, one of the most common questions you’ll face is: Should I structure my work as a 1099 independent contractor or stick with W-2 employment? This decision can significantly impact how you leverage Act 60’s benefits, as well as how you meet the compliance requirements to qualify as a bona fide resident. Below, we’ll explore the implications of each option, factoring in the key residency tests—Presence Test, Tax Home Test, and Closer Connection Test—and how they align with Act 60’s framework. Understanding Act 60 Benefits Act 60, officially the Puerto Rico Incentives Code, consolidates previous laws like Act 20 (export services) and Act 22 (individual investors) into a streamlined package designed to attract businesses and high-net-worth individuals to the island. For individuals under Chapter 2 (Individual Resident Investor), benefits include a 100% exemption from Puerto Rico income taxes on interest, dividends, and certain capital gains accrued after establishing residency, provided you secure a tax exemption decree. For businesses under Chapter 3 (Export Services), perks include a 4% corporate income tax rate, exemptions on dividends, property taxes, and municipal taxes for qualifying export services performed from Puerto Rico for clients outside the island. Additionally, under Section 933 of the U.S. Internal Revenue Code, U.S. citizens who become bona fide residents of Puerto Rico can exclude Puerto Rico-sourced income from U.S. federal income tax—assuming residency requirements are met. 1099 Contractor vs. W-2 Employee: Breaking It Down As a 1099 Contractor As a W-2 Employee Residency Tests and Compliance Requirements To unlock Act 60’s federal and local tax benefits, you must establish bona fide residency in Puerto Rico under IRS rules (Section 937). This involves passing three key tests: Practical Steps for Success Final Thoughts Choosing between 1099 contractor and W-2 employee status under Act 60 depends on your priorities—flexibility and tax optimization versus simplicity and stability. Contractors can unlock greater tax savings by building a Puerto Rico-based business, while employees benefit from ease but may face limitations on local tax exemptions. Whatever path you take, understanding the residency tests and aligning your work structure with Act 60’s requirements is key to making the most of this unique opportunity. Disclaimer: This blog post is for informational purposes only and does not constitute financial or legal advice. Consult a qualified professional before making tax or employment decisions.

Act 22 Compliance Checklist: Stay on Track and Protect Your Tax Benefits

Leave a Comment / Compliance, Tax Incentives, Tax Tips, Taxes / By Amervim Bonano

Puerto Rico’s Act 22 (now part of Act 60) provides significant tax benefits to Resident Individual Investors. However, these benefits come with strict compliance requirements. Failing to meet these obligations can result in revocation of benefits and financial penalties. Below is a checklist to help ensure you stay in compliance and continue enjoying the benefits of your decree. ✅ Act 22 / Act 60 Compliance Checklist 🗓️ Yearly Compliance Tasks Task Due Date Notes Completed Submit Annual Report to OITE & PR Treasury 30 days after tax filing deadline Required for compliance. Missing this can cause revocation. ☐ Make $5,000 Charitable Contribution to a Puerto Rico Nonprofit Before filing annual report Must be Puerto Rico-based and not controlled by you. Keep receipt as proof. ☐ Maintain Bona Fide Puerto Rico Residency Ongoing (183+ days/year) Track travel days to ensure 183+ days in Puerto Rico yearly. ☐ Report All Required Financial Information Accurately Ongoing Misreporting can result in revocation & penalties. ☐ 📝 One-Time / As-Needed Compliance Tasks Task Due Date Notes Completed File IRS Form 8898 (if previously a U.S. resident) First year only, by U.S. tax deadline Confirms move to Puerto Rico. Missing this may trigger U.S. tax issues. ☐ Notify OITE if Residency Changes Within 30 days of moving If you leave PR, you lose tax benefits. Must send written notice. ☐ Ensure Grant Acceptance is Notarized & Filed 90 days after receiving the decree Failure to do this will make the grant retroactively null & void. ☐ Review Grant Terms & Act 22 Compliance Rules Annually Stay updated on any legal changes affecting your benefits. ☐ ⛔ Red Flags That May Lead to Revocation 📌 Best Practices ✔ Set calendar reminders for key deadlines. 📅✔ Keep records of donations, filings & travel days for audits. 🗂️✔ Consult and reach out to us yearly for updates. 🏛️✔ Double-check that all filings are accurate before submission. ✅ ⚠️ Important Caveat Each Act 22 decree is a separate contract with the government, meaning that specific terms and obligations may vary. Please review your individual decree to ensure full compliance. If you would like us to review your case or prepare a customized compliance plan for you, don’t hesitate to reach out to our office 📞 Contact Us For assistance with Act 22 compliance or to schedule a consultation, feel free to reach out to us: We’re here to help you navigate Act 22 and ensure you remain compliant while maximizing your benefits!

¿Tienes Derecho al Crédito por Trabajo en Puerto Rico? Usa Nuestra Calculadora y Descúbrelo

Leave a Comment / Tax Incentives, Tax Tips, Taxes / By Amervim Bonano

El Crédito por Trabajo es un incentivo diseñado para ayudar a los trabajadores de ingresos bajos y moderados en Puerto Rico. Este beneficio podría representar un alivio económico importante para muchas familias, pero no todos saben si cualifican o cuánto podrían recibir. Para facilitarte el proceso, hemos creado una calculadora gratuita donde puedes ingresar tu información básica y obtener una estimación de cuánto podrías recibir. 📥 Accesa la calculadora aquí: Calculadora de Crédito por Trabajo 2025 Ingresa tu información a continuación para calcular tu estimado de Crédito por Trabajo: Ingreso Bruto Anual ($): Número de Dependientes: 0123 o más Estado Civil: SolteroCasado (radicando en conjunto) Calcular Crédito Crédito Estimado: $0 Escríbenos por WhatsApp 🔹 ¿Cómo funciona?Solo necesitas ingresar tres datos clave: ¿Quiénes pueden cualificar? Para recibir el Crédito por Trabajo, debes cumplir ciertos requisitos, como: ✅ Haber trabajado y generado ingresos✅ Ser residente de Puerto Rico durante todo el año contributivo✅ Tener un número de Seguro Social válido✅ No exceder los límites de ingresos establecidos según el número de dependientes Los detalles específicos sobre los límites y fórmulas de cálculo están basados en las guías del Departamento de Hacienda de Puerto Rico. Importante: Disclaimer 💡 Esta calculadora es una herramienta informativa y no sustituye asesoría fiscal profesional.Los resultados que obtengas son solo una estimación y no garantizan la cantidad final de crédito que podrías recibir. Para confirmar tu elegibilidad y monto exacto, te recomendamos consultar con un especialista en contribuciones o verificar con el Departamento de Hacienda de Puerto Rico. No pierdas la oportunidad de verificar si puedes recibir este incentivo. Utiliza la calculadora, ingresa tus datos y descubre si tienes derecho a este beneficio. ¡Comparte con familiares y amigos que también puedan beneficiarse!

Have You Checked If Your Act 22 or Act 60 Tax Grant Requires These Key Points?

Leave a Comment / Uncategorized / By Amervim Bonano

For investors benefiting from Puerto Rico’s tax incentives under Act 22 or Act 60, compliance with the terms of the grant is crucial to maintaining eligibility for the program’s benefits. While each grant represents a separate contract negotiated individually with the Puerto Rican government, there are common compliance points that appear in many grants. Ensuring adherence to these requirements is vital to avoid penalties or revocation of benefits. Here are some critical points you need to verify regarding your tax grant: 1. Condition for Effectiveness The tax exemption grant under Act 60 will not take effect immediately if the grantee was not a resident of Puerto Rico when the grant was approved. To activate the grant: Implication: Until these steps are completed, the tax benefits cannot be utilized. This ensures that only genuine residents benefit, aligning with the program’s goal of boosting local economic activity. 2. Property Acquisition Requirements Alternative Option: The grantee may purchase land and construct a home within the two-year window. Proof of construction completion must be included in the annual report for the tax year of completion. 3. Annual Filing Requirements Failure to file these reports may result in penalties or grant revocation. 4. Nonprofit Donation Obligations From the second year after the grant becomes effective, grantees must donate at least $10,000 annually to Puerto Rican nonprofits: 5. Capital Gains Tax Treatment 6. Termination of Residency If a grantee ceases to be a resident of Puerto Rico: Important Reminders Staying ahead of these requirements ensures you maximize the benefits of your tax grant while avoiding penalties or revocation. For those considering this opportunity, it’s crucial to be thoroughly informed and prepared to comply with all stipulations to fully benefit from Act 60. Should you require additional guidance or have specific inquiries, seeking tailored professional advice is highly recommended. For further assistance or more information, please feel free to contact us at [email protected] or 787-473-8985. Disclaimer: The information provided herein is for informational purposes only and should not be construed as legal or tax advice.

Does My YouTube Channel’s Source of Income Qualify for Act 60 Export of Services?

Leave a Comment / Doing Business, FAQ, Tax Incentives, Tax Tips, Taxes / By Amervim Bonano

If you’re a YouTube creator wondering whether your ad revenue can qualify under Puerto Rico’s Act 60 for Export of Services, here’s what you need to know: Understanding Act 60 Act 60 in Puerto Rico was designed to attract businesses by offering significant tax incentives, particularly for those providing services to clients outside of Puerto Rico. The key here is that the income must be from “export services,” meaning services provided to non-residents or entities not located in Puerto Rico. YouTube Ad Revenue as an Export Service Your YouTube channel’s ad revenue could potentially qualify under Act 60 if: How to Qualify Here’s how you might go about qualifying: Why It Qualifies The rationale behind this qualification is: Final Thoughts While your YouTube channel’s ad revenue can indeed qualify for Act 60 benefits, navigating the application and ensuring ongoing compliance requires careful planning and possibly the assistance of a tax advisor familiar with Puerto Rican incentives like us at Bonn LLC. This can be a lucrative strategy if managed correctly, significantly reducing your tax burden and potentially enhancing your income from YouTube activities. For those considering this opportunity, it’s crucial to be thoroughly informed and prepared to comply with all stipulations to fully benefit from Act 60. Should you require additional guidance or have specific inquiries, seeking tailored professional advice is highly recommended. For further assistance or more information, please feel free to contact us at [email protected] or 787-473-8985. Disclaimer: The information provided herein is for informational purposes only and should not be construed as legal or tax advice.