Tax Day Blues? Move to Puerto Rico for Epic IRS Loophole
Tax day got you down? Consider moving to Puerto Rico to take advantage of an epic income tax loophole. | Source: Shutterstock
By CCN.com: Tax season has once again come and (almost) gone, and so have many hard-earned dollars that once lined your wallet and bank account. But just because you’ve been paying federal taxes for as long as you’ve been earning an income doesn’t mean you have to keep doing so.
A loophole in the federal tax code allows citizens of Puerto Rico who qualify for Act 22 to pay as little as 0% federal taxes on capital gains and earned income. But for crypto investors, the tax incentives Puerto Rico offers are only the tip of the iceberg. Pristine beaches, warm weather year-round, and access to some of blockchain’s most keyed-in figures – like bitcoin billionaire Brock Pierce – are among the others.
Here are three reasons that you should move to Puerto Rico – especially if you’re a crypto investor.
1. Puerto Rico Incentivizes High Earners with 0% Tax
https://www.youtube.com/watch?v=qym05XzWlZ0
If you qualify for the unique tax benefits that Puerto Rico offers, you could save up to 100% on federal income taxes. To meet the requirements, one must:
- Become a bonafide resident of Puerto Rico (spending a minimum of 183 days per year on the island).
- Pass a criminal background check.
- File the appropriate applications with the IRS. All-in filing costs range from $5,000 to $12,000.
- Make a $5,000 annual donation to an approved local nonprofit.
If the potential to save up to 100% of the federal income tax you pay each year isn’t enough to entice you, there’s more.
Now is an ideal time for crypto traders and blockchain enthusiasts to relocate to the island. That’s because Puerto Rico is quickly becoming a technology hub, and many analysts believe that cryptocurrencies are just getting started on another epic bull run.
2. Information, Knowledge, & Power
During the largest bull run in cryptocurrency history (late 2017 – Jan ’18), blockchain evangelist and Bitcoin billionaire Brock Pierce moved to Puerto Rico to take advantage of the tax benefits and to help Puerto Rico rebuild after Hurricane Maria devastated the island’s infrastructure. Many crypto investors and developers followed.
And do you know what being around people who know the news before journalists break it leads to? That’s right: information, knowledge, and power.
Brock Pierce Talks Puerto Rico
Brock Pierce is one of the most polarizing names in blockchain. Whether you admire his efforts or judge him harshly for his outlandish style and unnerving resistance to strictures, you have to admit: he knows things that the average Joe does not.
And Pierce isn’t alone. Since relocating to the island, Pierce notes that approximately 1,000 people have followed. Who knows, maybe even Satoshi is among them.
When CCN.com asked Pierce what his community is currently doing to help the island rebuild, Mr. Pierce simply said, “everything we can.” From stimulating the economy with real estate purchases and rentals, dining out, and opening new businesses to an on-the-ground effort to help Puerto Rico increase their food resiliency, Pierce and his cohort say they are dedicated to improving the island – and helping its people.
Opponents of Pierce’s group – and the IRS tax code that enable Puerto Rico to offer the tax benefits – argue that the trickle-down economic effect doesn’t work. But Puerto Rico’s government disagrees. In 2015 , 2016 , and 2018 , Puerto Rico conducted economic impact reports and concluded that the acts do positively impact the island’s economy.
3. Crypto Taxes: Regulators Are Catching Up
Precious few Americans who own cryptocurrencies are currently reporting their annual gains or losses to the IRS. Whether you do or not, experts agree: you definitely should.
Numerous tools exist to help you track trades and coins’ values, along with step-by-step guides and tutorials for paying your crypto taxes. Still, the entire process can be more than a bit laborious.
As legislation catches up to innovation (or tries to), the taxation policies on cryptocurrencies remain as ambiguous and dynamic as the bitcoin price itself.
While there is little you can do to impact how the government decides to tax cryptocurrencies, you do have the power to vote with your feet, move to Puerto Rico, and pay no federal income tax from here out.
If you’re looking to save on your 2019 tax bill, you might want to consider relocating to Puerto Rico by July 2nd to qualify for the year.
