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I am a permanent resident of USA and I live at Illinois. I work remotely at my home in Illinois for an employer at Puerto Rico. I am not sure if I should pay Puerto Rico taxes.

As far as I understood I don't need to pay Puerto Rico tax because I work from Illinois and even though the employer is from Puerto Rico the income would be considered as US source income and not as Puerto Rico source of income. Is this correct?

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    You're aware that Puerto Rico is a territory of the United States, right?
    – Joe
    May 9, 2018 at 18:02
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    @Joe Puerto Rico and the U.S. have separate tax laws.
    – Ben Miller
    May 9, 2018 at 18:37
  • @BenMiller Yes, I'm aware of that, but just making sure it's clear - the question as worded was not clear on that front to me.
    – Joe
    May 9, 2018 at 18:41
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    Yes, I am aware that Puerto Rico is a territory of United States
    – Ravi
    May 10, 2018 at 15:39
  • Puerto Rico is a territory of the US and enjoys a lot of privilege, but it is not technically part of the same country. Its citizens are US citizens as well, but the territory itself is actually held by the US as a separate entity, similar to places like Guam and Saipan.
    – Panzercrisis
    Jun 2, 2020 at 19:21

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Puerto Rico is an unincorporated territory of the United States. So from a federal/country level, all income is US, and you don't have any concerns there. You will owe US Federal taxes, as you're not a Puerto Rico resident (which would exempt you from federal taxes).

As far as state taxes go, if you live and work in Illinois, you will pay Illinois taxes. Your employer should be able to withhold those for you; talk to your employer to make sure that's happening correctly.

It's possible your employer will withhold tax for Puerto Rico; if so, you may need to file a Puerto Rico tax return to have that returned to you.

There are exceptions to this, though, depending on the exact details of your work; it's best to check with a tax specialist who specifically knows Puerto Rico law. In Chicago there should be lots of those, as there is a strong Puerto Rican community.

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  • Thank you for your answer. I was specifically looking for an answer from someone who knows Puerto Rico law. If I don't find any answer from a specialist here I will go and find a tax specialist as you said.
    – Ravi
    May 10, 2018 at 15:41
  • It's not so much that knowing it is needed to answer this question in the generic - it's that you want someone to look at your specific situation, in that it's possible there are other factors that are specific to what you're doing that could affect it.
    – Joe
    May 10, 2018 at 15:46

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