Puerto Rico — Act 60 Bona Fide Residency (183 Days)

Summary

Day threshold

183 days

Window

Calendar year (1 Jan – 31 Dec)

Triggers on

Day 183

Also required

Tax-home & closer-connection tests

Basis

IRC §937 / IRS Pub. 570

To be treated as a bona fide resident of Puerto Rico under Act 60, the physical-presence prong requires you to be present in Puerto Rico for at least 183 days during the calendar year. Reaching day 183 satisfies that prong — but presence alone is not enough. You must also pass the tax-home test and the closer-connection test under IRC §937, all in the same tax year, before you count as a bona fide resident.

Who it applies to

This matters most if you are:

• A US citizen or resident relocating to Puerto Rico to claim Act 60 individual tax incentives.
• A remote worker, investor, or business owner splitting time between the mainland and Puerto Rico.
• Someone in their first partial year in Puerto Rico, where the presence and connection tests are assessed more flexibly around the move.

It applies to individuals regardless of the specific decree — the §937 residency tests are the gateway to Act 60 benefits, not the incentive itself.

The rule — and why it exists

Bona fide residence in a US territory is defined by IRC §937 and detailed in IRS Publication 570. It rests on three tests that must all be met for the tax year:

• Presence test. Most people satisfy this by being present in Puerto Rico for at least 183 days in the calendar year (alternative presence rules exist — see exceptions).
• Tax-home test. Your main place of business or employment — your tax home — must be in Puerto Rico for the year.
• Closer-connection test. You must have a closer connection to Puerto Rico than to the US or any foreign country, judged on family, home, belongings, and social and economic ties.

Why it exists: because Puerto Rico offers substantial tax advantages, the US uses these tests to make sure the benefit goes to people whose economic life has genuinely moved there — not to those who simply visit enough days while keeping their real base on the mainland.

Counting the days

1. 1Add up every day you are physically present in Puerto Rico during the calendar year (1 January to 31 December).
2. 2The days do not need to be continuous — they can be spread across multiple visits within the same calendar year.
3. 3Any day you are present in Puerto Rico counts as a full day, including arrival and departure days.
4. 4The count resets to zero each 1 January; it is a calendar-year test, not a rolling 12-month window.
5. 5Reaching 183 days satisfies the presence prong — but not the tax-home or closer-connection tests.

Examples

Example 1 — clearly resident

You move to San Juan in January, work from there, and spend 210 days in Puerto Rico across the year. Your job and home are in Puerto Rico and your family moved with you. You pass all three tests and are a bona fide resident.

Example 2 — enough days, but fails connection

You spend 185 days in Puerto Rico but keep your primary home, your main job, and your family in Florida. You meet the presence test, yet your tax home and closer connection remain on the mainland — so you are not a bona fide resident.

Example 3 — falls short on days

You genuinely relocate but travel heavily, spending only 150 days in Puerto Rico. You fail the 183-day presence test for that year and would need to rely on one of the alternative presence rules to qualify.

Exceptions & edge cases

• Alternative presence tests. IRC §937 also lets you meet presence by spending no more than 90 days in the US during the year, or by having no significant connection to the US — useful if you fall short of 183 days in Puerto Rico.
• Year of the move. Special first-year and last-year rules apply the tax-home and closer-connection tests only to the part of the year after you establish (or before you end) residency.
• US-source and built-in gains. Bona fide residency does not shelter US-source income or gains that accrued before you moved; those can remain subject to US federal tax.

Common misconceptions

• "183 days makes me an Act 60 resident." False — it only clears the presence prong; you still need the tax-home and closer-connection tests.
• "Bona fide residency means no US tax at all." False — US-source income, pre-move gains, and federal filing obligations for US citizens can still apply.
• "It's a rolling 12-month count." False — the presence test runs on the calendar year and resets each 1 January.

Frequently asked questions

Sources

• IRS — Individuals living or working in US possessions
• IRS — Bona fide residence in a US territory (Publication 570)