Federal Tax Credits
Available to U.S. & Puerto Rico Individuals and Businesses
The U.S. tax code provides a range of federal tax credits that can significantly reduce tax liability for eligible individuals and businesses. These credits may be refundable, nonrefundable, or transferable depending on the program.
Our firm helps U.S. and Puerto Rico-based clients understand and claim tax credits available under both federal and local law. Whether you’re filing as an individual or operating a business, we ensure proper credit usage, eligibility, and compliance.
Common Federal Tax Credits for Individuals
While applicable to U.S. residents; some credits also apply to Puerto Rico residents with U.S. income:
- Credit for Other Dependents (ODC)
- Saver’s Credit (Retirement Savings Contributions Credit)
- Clean Vehicle Tax Credit
- Credit for the Elderly and Disabled
Puerto Rico residents who file U.S. tax returns, earn U.S.-source income, or hold dual filing status may qualify for some credits. We evaluate eligibility case-by-case.
Business Credits & Federal Incentives
The following are available for U.S. entities and certain Puerto Rico-based businesses:
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Foreign Tax Credit: For taxes paid to foreign governments.
These credits support operations, payroll, hiring, innovation, and energy projects. Depending on your tax position and location, you may benefit directly or transfer credits to another taxpayer in certain cases.
Renewable Energy Tax Credit Transfers (Section 6418)
The Inflation Reduction Act of 2022 introduced Section 6418, which allows certain energy-related tax credits to be transferred or sold for cash. Recent IRS regulations provide compliance guidance.
Key Highlights:
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Eligible sellers: U.S. taxpayers (excludes direct pay entities like nonprofits, tribes, etc.)
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Buyers: individuals, trusts, partnerships, or corporations
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Credits: limited to approved clean energy projects
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Sales: must be registered, one-time only, and paid in U.S. dollars
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Recapture risk: buyer may be liable if seller fails compliance
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Penalty: 20% penalty for excessive credit claims (unless reasonable cause shown)
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Anti-abuse: IRS can disallow abusive transfers
Puerto Rico-based businesses not subject to federal income tax may still qualify if they meet IRS eligibility standards. We help structure and support compliant transfers.
Puerto Rico Residents & Federal Credits
Puerto Rico residents are generally exempt from federal income tax, but exceptions apply. These include:
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U.S.-sourced income (e.g., investments, employment, pensions)
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Dual filers (residents of PR who are U.S. citizens or have ties to both jurisdictions)
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Federal program participation (e.g., COVID relief, renewable energy grants, etc.)
Our firm evaluates whether a federal credit applies based on your residency, source of income, entity structure, and tax filing requirements.
Take the Next Step
We assist with federal tax credit analysis, compliance, documentation, and strategy. Whether you are based in the U.S., Puerto Rico, or both, our cross-jurisdictional insight helps you capture available benefits.