You Came Up Short This Year: What Failing the Presence Test in Puerto Rico Means for That Year

What happens if you fail the presence test in Puerto Rico for one year?

You are not a bona fide resident of Puerto Rico for that year. That is the plain result: the tests are applied to each taxable year, so a short year is a status question for that year. Neither 26 CFR section 1.937-1 nor Publication 570 spells out a separate penalty or a ripple effect on other years. What follows from a short year depends on your facts, so that part belongs with a licensed tax professional.

The sources do settle some things. This guide covers those: how residency is tested, which prong to check first, and what to gather before you talk to an advisor.

Is bona fide residency decided one tax year at a time?

Yes. A bona fide resident is a person who meets the presence test, the tax home test, and the closer connection test. The statute puts it in the same terms: section 937(a) refers to being present for at least 183 days "during the taxable year" and to not having a tax home outside the possession "during the taxable year."

The regulation says the same thing. Under 26 CFR section 1.937-1(b)(1), an individual is a bona fide resident of a possession by satisfying paragraphs (c) through (e), and those paragraphs are written in terms of the taxable year. Each year stands on its own facts.

Did you actually fail, or only miss 183 days?

The presence test is the rule that you meet one of five alternative conditions for the year. Missing one of them is not the same as failing the test.

Under 26 CFR section 1.937-1(c)(1), a U.S. citizen or resident alien meets the presence test by showing any one of these:

• present in Puerto Rico at least 183 days during the taxable year (the 183-day rule);
• present at least 549 days over a three-year period, with at least 60 days in each year (the 549 day test);
• present in the United States no more than 90 days during the taxable year;
• a low amount of U.S. earned income, as the regulation defines it, and more days in Puerto Rico than in the United States;
• no significant connection to the United States during the taxable year.

A year with 170 days in Puerto Rico can still meet the test through another prong. A year with 190 days can still fail the residency determination if another test is not met. Check each prong against your actual record before you call the year short.

Presence is only one of three tests. What about the other two?

Residency requires all three: presence, tax home, and closer connection. The tax home and closer connection tests are separate from the day count, and both look at the whole year.

The regulation says you must not have had a tax home outside the possession "during any part of the taxable year." Your tax home is your regular or main place of business, employment, or post of duty. If you have no regular place of business, it is generally where you regularly live.

The closer connection test asks whether you had a closer connection to the United States or a foreign country than to Puerto Rico during any part of the year. Publication 570 lists factors such as the location of your permanent home, family, personal belongings, banking, driver's license, voter registration, and the forms you file.

So a year can fail even when the day count is fine. And if you came up short on one prong but met another, the other two tests are where the year is decided.

Were the days counted correctly?

Recount before you conclude anything. Under 26 CFR section 1.937-1(c)(3), a day counts as a day in the possession if you are physically present there at any time during that day. A day spent in both the United States and Puerto Rico counts as a Puerto Rico day for this purpose.

The regulation also counts some days spent outside. Days away to receive qualifying medical treatment (or to accompany a parent, spouse, or child receiving it) count, and so do days when a major disaster or a mandatory evacuation order kept you from returning. Transit days that touch the United States for less than 24 hours do not count as U.S. days.

Year boundaries matter as well. See which tax year a day belongs to if a flight sat near January 1 or December 31.

Some counting questions are unsettled. Published guidance does not address how same day dual presence is treated when you are in Puerto Rico and the United States on one calendar day, or whether time in territorial waters on a cruise counts. If your year turns on a question like that, get the answer in writing from a licensed tax professional before you file.

Does the year you moved follow different rules?

It can. The regulation has year-of-move rules that apply when a person starts or stops being a resident during the year. They are narrow, and they depend on what happens in the surrounding years. Read them closely, and see moving mid year.

For a move to Puerto Rico, 26 CFR section 1.937-1(f)(1) treats you as meeting the tax home and closer connection tests for the year of the move if you were not a bona fide resident in each of the 3 preceding years, had no tax home or closer connection elsewhere for the last 183 days of the year, and are a bona fide resident in each of the 3 following years.

For a move away, section 1.937-1(f)(2)(ii) and Publication 570 describe a Puerto Rico rule for a U.S. citizen who was a Puerto Rico resident for at least 2 preceding years and ceases residence and tax home during the year. That person remains a bona fide resident for the part of the year before the tax home ends, if they had a closer connection to Puerto Rico throughout that part. Publication 570's example treats the taxpayer as a bona fide resident from January 1 through May 4, 2025, even though the 2025 presence test was not met.

Whether any of this fits your year is a fact question.

Do you have to file anything about a change of status?

Possibly. Publication 570 says you must file Form 8898 if your worldwide gross income for the year is more than $75,000 and you take a position about becoming or ceasing to be a bona fide resident. It defines worldwide gross income as all income you received in the form of money, goods, property, and services, including foreign-source income you can exclude. Failing to file, or filing with incorrect information, may bring a $1,000 penalty unless you show reasonable cause and no willful neglect.

Publication 570 has further filing guidance for a person who is not a bona fide resident. Read that section directly or confirm it with your advisor.

What should you bring to an advisor?

Bring a day-by-day record for the year, the prong you think you missed, the dates your regular place of work or home changed, and the facts behind your connections: where your home, family, accounts, license, and registrations were. If you moved, bring the dates.

A record built as you go makes this easier. Reconstructing a year after the fact is where people struggle. One83 builds a day-by-day record from your calendar so the record exists before anyone asks for it.

Frequently Asked Questions

Does failing the presence test one year end my Puerto Rico residency for later years?

The regulation applies the tests to each taxable year, so a short year is a status question for that year. The published sources do not spell out effects on other years, and those depend on individual facts, so take them to a tax professional.

Is falling under 183 days the same as failing the presence test?

No. The 183-day count is one of five alternative prongs in 26 CFR 1.937-1(c)(1). A year under 183 days can still meet the test through another prong, but the tax home and closer connection tests must also be met.

Do days outside Puerto Rico ever count as Puerto Rico days?

In limited cases. The regulation counts days outside for qualifying medical treatment, and days when a major disaster or mandatory evacuation order prevented a return. Check the regulation text for the exact conditions.

What if I left Puerto Rico partway through the year?

Section 1.937-1(f)(2)(ii) and Publication 570 describe a rule for a U.S. citizen who ceases Puerto Rico residence during the year, which can treat the earlier part of the year as bona fide residence. Whether it fits depends on your facts.

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