The Year You Leave Puerto Rico: How Your Residency Is Counted in the Year of the Move

How is your residency counted in the year you leave Puerto Rico?

In the year you leave, the rules are not the mirror image of the year you arrived, and a special Puerto Rico rule can treat you as a bona fide resident for the part of the year before the move, even though you fail the full-year tests. The rule sits in 26 CFR section 1.937-1(f) and is restated in Publication 570.

Below: the general rule, the Puerto Rico rule, the date that splits your year, Form 8898, and income sourcing. There is also a short section for people leaving with an individual decree.

Why is leaving not the mirror image of arriving?

The year of move is the tax year in which your residence changes. The regulation treats it with different conditions depending on the direction. For a move to a possession, paragraph (f)(1) looks at the last 183 days of the year of change and at the 3 years that follow. For a move from a possession, paragraph (f)(2) looks at the first 183 days of the year and at the 3 years before and after.

So the arrival rules do not tell you how your leaving year is treated. If you want the arrival side, read the rules for arriving in the middle of a year. Everything below is about leaving.

What is the general rule when you leave a territory?

Under 26 CFR section 1.937-1(f)(2)(i), three conditions apply when you move from a possession:

• You were a bona fide resident in each of the 3 prior years.
• You met the tax home and closer connection conditions during the first 183 days of the year of change.
• You are not a bona fide resident of the possession in each of the 3 following years.

If those conditions are met, the regulation treats you as a bona fide resident for the year of change. Example 9 in the regulation shows it: J is a bona fide resident of a possession through 2009, moves to a state in September 2010, and is treated as a bona fide resident of the possession for all of 2010, assuming the presence test is also met.

Look at that last clause. The general rule speaks to the tax home and closer connection conditions, and it does not remove the presence test.

What does the special Puerto Rico rule do for the part of the year before you leave?

Puerto Rico has its own provision in paragraph (f)(2)(ii). It applies "notwithstanding" a failure to satisfy the presence, tax home, or closer connection test for the year. It treats you as a bona fide resident of Puerto Rico for the part of the year before the move if all of these are true:

1. You are a U.S. citizen.
2. You were a bona fide resident of Puerto Rico for at least 2 tax years immediately before the year of move.
3. You cease to be a bona fide resident of Puerto Rico during the tax year.
4. You cease to have a tax home in Puerto Rico during the year.
5. You had a closer connection to Puerto Rico than to the United States or a foreign country before your tax home in Puerto Rico ended.

Note the number: for Puerto Rico the look-back is at least 2 years, while the general rule for a possession asks for each of the 3 prior years. Publication 570 states the Puerto Rico conditions the same way.

Both sources give a worked example. In Publication 570, a U.S. citizen was a bona fide resident of Puerto Rico for 2023 and 2024 and moved to Nevada on May 5, 2025. That person did not meet the presence, tax home, or closer connection tests for all of 2025. They were still a bona fide resident of Puerto Rico from January 1 through May 4, 2025, because they met the 2-year rule before the move. Example 10 in the regulation reaches the same result for a move in May 2008 and notes that the person fails the presence test for that year.

In practice, falling short of the full-year presence test in your leaving year is expected. It doesn't settle the question by itself. For the general effect of a short year, see what failing the presence test means for that year.

One point the published sources do not settle for you is how to pin the date your tax home ended when the move happens in stages, such as a lease that runs on after you relocate or a job that changes mid-month. Published guidance does not address those facts directly. If your year turns on that date, get it in writing from a licensed tax professional before you file.

How do you document the move date?

The date matters because it splits the year into a part that is treated as Puerto Rico residency and a part that is not. Choose it deliberately, and be ready to show it.

The evidence that tends to line up with a tax home ending is ordinary: the end of the lease or the sale of the home, the date your regular place of work changed, a change of address on your records, and the travel that took you off the island for the last time as a resident. Keep these together with your day count. Readers who want the counting mechanics can start with what counts as a day in Puerto Rico.

Keeping a day-by-day record by hand is the part people let slide in a year of boxes and flights. One83 builds that record from your calendar, so the days before and after the move are already sorted when you need to show them.

What is Form 8898 and when do you file it?

Form 8898 is the statement individuals file to notify the IRS that they began or ended bona fide residence in a U.S. territory under IRC section 937(c), as the IRS page for Form 8898 describes it.

The Instructions for Form 8898 set out who files and when:

• You must file if your worldwide gross income for the year is more than $75,000 and you take a position that you ceased to be a bona fide resident, based on your earlier filing history.
• File by the due date of your Form 1040, including extensions.
• Mail it to the IRS as the instructions direct. Do not attach it to your return.
• Spouses who both must file each file a separate form.
• A $1,000 penalty may apply for failing to file or for incomplete or incorrect information, unless you show reasonable cause and no willful neglect.

The form asks for the exact move date and for your days present in the territory and in the United States. That is another reason to settle the date before you file, and to keep the record behind it.

How is income sourced in the year you move?

Publication 570 sources compensation on a time basis when you work partly inside and partly outside the territory. The Puerto Rico share is your total compensation multiplied by the days worked in Puerto Rico over the total days worked. The publication's example: 180 days in Puerto Rico out of 240 days worked, on $80,000 of compensation, gives $60,000 of Puerto Rico source income.

Certain fringe benefits, such as housing, education, and moving expense reimbursements, are sourced on a geographical basis instead. Publication 570 also allows an alternative basis if you can show it reflects your income more accurately, and you must keep records that support it. Beyond these points, how your own pay is split is a question for your advisor.

What changes if you leave with an individual decree?

Nothing changes in the federal year of move rules. A decree is a Puerto Rico matter. Whether you hold an Act 22 or an Act 60 individual decree, the federal rules in 26 CFR section 1.937-1(f) decide how your residency is counted in the leaving year, and Form 8898 applies in the year residency ends.

If you are still on a decree and want the background on the yearly test, read the presence test you must meet each year on an Act 22 decree. What your decree requires on the Puerto Rico side when you leave is outside this guide. Ask your advisor, and do it before the move date, not after.

What should you settle before you leave?

Settle four things. First, the date your tax home in Puerto Rico ends, and the evidence for it. Second, a clean day-by-day record for the days before and after that date. Third, whether you will file Form 8898, using the $75,000 worldwide gross income test and the due date. Fourth, how your income for the year will be sourced between Puerto Rico and the mainland. Bring all four to a licensed tax professional.

Frequently Asked Questions

Am I a Puerto Rico bona fide resident for the whole year I move away?

Not necessarily. The special Puerto Rico rule treats a U.S. citizen as a bona fide resident only for the part of the year before the move, if the conditions in 26 CFR 1.937-1(f)(2)(ii) are met. After the tax home ends, the days belong to your new place.

How many years must I have been a resident before the Puerto Rico year of move rule applies?

For Puerto Rico, the regulation and Publication 570 require at least 2 immediately preceding tax years as a bona fide resident. The general rule for other territories asks for each of the 3 prior years.

Who has to file Form 8898 when leaving Puerto Rico?

You must file if your worldwide gross income for the year is more than $75,000 and you take a position that you ceased to be a bona fide resident after filing as one. File by the due date of your Form 1040, including extensions, and mail it separately.

Does an Act 22 or Act 60 individual decree change these federal rules?

No. A decree is a Puerto Rico matter. The federal year of move rules and Form 8898 apply to ending bona fide residency regardless of a decree. Ask your advisor how your decree is treated on the Puerto Rico side.

One83 is a tracking tool, not tax advice. Consult a licensed tax professional about your situation.