Resources for legal cross-border tax planning
Start with the official sources — they cost nothing and reflect the current rules more reliably than any secondhand summary.
- IRS — International Taxpayers guidance — The Internal Revenue Service's own published guidance on foreign income, FEIE, foreign tax credits, and account reporting for US persons abroad.
- IRS — Report of Foreign Bank and Financial Accounts (FBAR) reference — Official current guidance on who must file, current thresholds, and how FBAR reporting works.
- Puerto Rico Department of Economic Development and Commerce (DDEC) — Act 60 incentives — The Puerto Rico government agency that administers Act 60 tax incentive programs, for checking current official requirements directly.
This is a cross-border topic — where a rule depends on where you live or are tax-resident, the country is named on the page.
Checklists you can work through
Before you take a jurisdiction idea further
- Identify which tax system model applies to your citizenship and the destination country
- Check whether a tax treaty exists between your two specific countries
- List the specific residency test requirements for the destination, not a general description
- Identify what reporting obligations your home country still imposes regardless of where you live
- Write down which category your income falls into (earned, investment, business)
- List your questions for a licensed cross-border tax professional
Before you open or maintain a foreign account
- Confirm whether the account triggers a reporting requirement based on its value, not its tax treatment
- Note the account's highest value at multiple points during the year, not just year-end
- Keep account-opening documents and ownership records
- Confirm who has signature authority and whether that also triggers reporting
- Set a recurring reminder to check current reporting thresholds each year
- Keep copies of every filed disclosure form indefinitely
Common mistakes worth avoiding
Assuming residency alone ends all US tax obligations
Check whether citizenship-based taxation applies to you specifically — for US citizens, moving abroad generally doesn't end federal filing obligations on its own.
Treating foreign account reporting as optional if no tax is owed
Reporting thresholds are generally based on account value, not taxable income — report regardless of whether tax is owed on the account.
Assuming a rule that applies to one country applies to another
Check the specific tax system model and any specific treaty for your exact two countries — don't generalize from a different country pair.
Treating Act 60 qualification as a formality
The bona fide residency tests are strict and fact-specific — get a professional review of your actual physical presence, tax home, and closer-connection facts.
Keeping thin records for the country you moved from
Maintain organized records in both countries indefinitely — your home country's look-back period doesn't end just because you've relocated.
Acting on a strategy that wasn't put in writing
Ask any professional to document the specific legal basis for a recommendation before you rely on it.
Glossary
The words that get used as if everyone already knows them.
Tax avoidance
Legally arranging your affairs to reduce tax owed, based on real, honestly reported facts. Legal and widely practiced.
Tax evasion
Illegally hiding income or misrepresenting facts to a tax authority to reduce tax owed. A crime in nearly every country.
Tax treaty
A bilateral agreement between two specific countries that allocates taxing rights and generally relieves double taxation on the same income.
Territorial tax system
A system that taxes only income earned within that country's borders, regardless of the taxpayer's residency or citizenship.
Worldwide (residence-based) tax system
A system that taxes residents on income earned anywhere, based on where they are a tax resident.
Citizenship-based taxation
A system that taxes citizens on worldwide income based on citizenship alone, regardless of residence. The United States is the primary large-scale example.
Bona fide residence test
A qualitative test for genuine foreign residency, based on the nature, intention, and duration of a person's stay in a foreign country.
Physical presence test
A day-count test for foreign residence, based on a minimum number of days physically present in a foreign country within a defined period.
Act 60
A Puerto Rico tax incentive program offering reduced rates on certain income to bona fide residents who meet specific requirements.
Foreign Earned Income Exclusion (FEIE)
A mechanism that can let qualifying US citizens or residents abroad exclude a portion of foreign-earned income from US tax.
FBAR
A required disclosure of foreign financial accounts for certain US persons, triggered by aggregate account value, separate from income tax filing.
FATCA
The Foreign Account Tax Compliance Act — requires certain US persons to report specified foreign assets, and requires foreign financial institutions to report US account holders.