VICENZA, Italy (February 26, 2019) -- Soldiers who claim a legal residence of Puerto Rico may have noticed the Defense Finance Accounting Service (DFAS) is withholding taxes for Puerto Rico, but not for the federal government. Why?
Soldiers who claim a legal residence of Puerto Rico are not generally required to file a U.S. federal income tax return if their only income is their military compensation. As a legal resident of Puerto Rico and member of the U.S. armed forces, your military compensation will be sourced to Puerto Rico. You must, however, file a Puerto Rico income tax return reporting your military income (which was sourced to Puerto Rico).
Under the Servicemember Civil Relief Act, spouses of Soldiers who are legal residents of Puerto Rico are eligible to claim the same tax residence as their active-duty spouse. Spouses who choose to keep Puerto Rico as their legal and tax residence when relocating with the Soldier spouse under military orders, the source of income for employment is considered to be Puerto Rico. The civilian spouse, therefore, must file a Puerto Rico income tax return. If your employer withheld federal income tax, you should consider also filing a federal income tax return to obtain a refund of your withholdings.
These filing rules are only applicable to Soldiers and their civilian spouses. These rules do not apply to U.S. government employees who are legal residents of Puerto Rico.
Unfortunately, the Vicenza Tax Center does not have the necessary software to prepare and file income tax returns for Puerto Rico. Military One Source tax consultants, however, can advise Puerto Rico clients of their filing options.
Anyone with questions about this or other tax-related issues are encouraged to stop by the tax center office.
The Vicenza Tax Center is located in the Office of the Staff Judge Advocate on Caserma Ederle in Building 166. Hours of operation are Monday, Tuesday, Thursday, and Friday, 8:30 a.m.-noon and 1-3 p.m. Thursdays hours are by appointment only. The satellite location at Caserma Del Din is located in the Company Operations Building, Building 50, Room 1042. The Del Din Tax Center is open every Wednesday from 9 a.m. to noon.
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