Filing taxes in Puerto Rico vs. Connecticut
What to know about taxes after moving to a state
Moving from Puerto Rico to Connecticut means a lot of changes. How you file your taxes, and what credits you can get, may also be new.
While Puerto Rican residents pay federal taxes, they unfortunately aren’t eligible for the same benefits as someone who lives in a state. For example, although Puerto Rican residents pay into Social Security, they can’t receive Supplemental Security Income if they live in Puerto Rico. Puerto Rican residents also unfortunately receive only a fraction of the Medicaid benefits as people in the states. Most residents of Puerto Rico also aren’t required to file a federal tax return, unless they work freelance or make money from a source outside of the territory.
For people who have recently moved to Connecticut from Puerto Rico, there are a few important things to keep in mind when it comes to new benefits you might have earned – including refunds from federal taxes.
When do you become a Connecticut resident?
The change in your residency status is the main reason why your taxes will be different. You might not be considered a resident of Connecticut right away.
For tax purposes, the documents you have to file depend on where you are a “bona fide” resident. For example, someone who is a resident of Puerto Rico and only has income from Puerto Rico doesn’t have to file a U.S. federal income tax return. You are required to file one if you’re a resident of a state.
There are three things that have to happen for you to be considered a “bona fide” Connecticut resident:
1. The first is meeting what’s called the “substantial presence” test. This can be a little confusing, but the IRS has an online tool to tell you if you qualify
2. The rest of the “bona fide” requirement looks at your connections to where you live. That can include if you have family in Connecticut and if you have a home here. If you have a stronger connection to Connecticut than Puerto Rico, and you pass the “substantial presence” test, then you are a “bona fide” Connecticut resident. Sometimes, the government decides this on a case-by-case basis.
3. There are different rules for members of the military and their spouses who are stationed in Puerto Rico. Different rules also apply if you lived in Puerto Rico and worked for the U.S. government.
How will your taxes change?
Your tax return will change when you move from Puerto Rico to Connecticut. The difference will be that you will probably qualify for more tax credits living in Connecticut than you did living in Puerto Rico.
You paid local taxes in Puerto Rico, and you will pay local taxes in Connecticut. Even if you didn’t file a U.S. federal tax return, you still filed one for Puerto Rico. When you become a resident of a state, you also file a separate tax return for that state.
You probably weren’t required to file a U.S. federal tax return when you lived in Puerto Rico. As a Connecticut resident, you might want to file federal taxes, because you may be eligible for some refunds.
What refunds could I get?
There are a few refunds for working people that you might be eligible for as a Connecticut resident. If you qualify, it’s your money – you’ve earned it, and you can claim it.
One tax credit you might qualify for as a Connecticut resident is the Earned Income Tax Credit. You unfortunately did not qualify for this when you lived in Puerto Rico. The earned income tax credit is money that working people earn. The government could owe you thousands of dollars, but you have to claim it in order to get it. Take our quiz to learn if you qualify.
Another common federal tax credit for working families is the Child Tax Credit. The credit reduces how much money you may owe the federal government. If you are listed as a resident of Puerto Rico last tax year, then you have to file a federal tax return with the IRS to qualify for the Child Tax Credit. Even if you didn’t file a federal return from 2021 to now, you can still file and claim the credit. There is no penalty for doing this, but 2021 credits will expire on April 15, 2025. After that, 2021 credits will go away, but you might still have credits from other years.
Other things to know
There are other tax credits you may qualify for. Voluntary Income Tax Assistance (VITA) sites are free, government-certified, no-commitment resources that help people file their taxes. Our partners at SimplifyCT are one of them.
The rules aren’t the same for every U.S. territory. Check with the IRS for more.