Puerto Rico Employer Obligations, Withholding and Returns

Hiring your first employee changes your obligations in a big way. In Puerto Rico, an employer answers to three agencies: the Departamento de Hacienda (Puerto Rico's Treasury Department, "Hacienda") for withheld income tax, the Departamento del Trabajo y Recursos Humanos (DTRH) (Puerto Rico's Department of Labor and Human Resources) for unemployment and disability insurance, and the IRS for federal Social Security and Medicare. This guide gives you the overall map. For payments to contractors, who are not employees, see informative returns 480.

Before your first payroll

1. Federal employer identification number (EIN). You apply with the IRS. The IRS replaced the old Form SS-4PR with Form SS-4.
2. Registration with Hacienda. With the EIN, the employer creates its employer record with Hacienda. Filing and paying withholding at source, and filing withholding statements, are done through SURI (Hacienda's online system).
3. Registration with the DTRH. The employer applies for its employer number for unemployment insurance and SINOT. Since September 1, 2026, these tasks are handled on the new Desempleo Digital platform, which replaced the Portal de Patronos (employer portal), according to the DTRH.
4. Form 499R-4 for each employee. This is the Withholding Exemption Certificate, where the employee states their filing status and exemptions. You use it to figure withholding with Hacienda's tables.

Hacienda: income tax withholding

How much to withhold

On each payroll, the employer withholds part of the wages for income tax, based on Form 499R-4 and Hacienda's withholding tables. The tables Hacienda lists as current are the ones that apply to wages paid after December 31, 2016. If the individual tax reform changes the rates, Hacienda would have to publish new tables. Check its website before each year.

When to deposit

According to Hacienda's employer manual (Manual para Patronos), which applies Regulation No. 5924:

Returns and withholding statements

• Quarterly return (Form 499R-1B): due April 30, July 31, October 31 and January 31. It includes payment of anything not already deposited.
• Withholding statement (Form 499R-2/W-2PR): filed electronically and given to each employee no later than January 31 of the following year. For 2025, Hacienda set February 2, 2026, because January 31 fell on a Saturday (Boletín Informativo, or Informative Bulletin, 25-08). The same statement is used for the federal Social Security Administration.
• Reconciliation statement (Form 499R-3): same due date as the W-2PR.

According to Bulletin 25-08, all withholding statements are filed electronically only through SURI, and the employee's copy is delivered within seven calendar days after the deadline, on paper or electronically if you meet Hacienda's requirements.

Department of Labor: unemployment, SINOT and chauffeur's insurance

Unemployment insurance and SINOT

Each quarter, the employer files with the DTRH a return of wages paid to each employee and pays three items: unemployment, SINOT (Seguro por Incapacidad No Ocupacional Temporal, Puerto Rico's temporary non-occupational disability insurance) and a special contribution. According to the DTRH:

• Unemployment: the rate the DTRH assigns to each employer for the year applies to the first $7,000 of each employee's wages in the calendar year. The rate depends, among other things, on the history of benefits charged to the employer's account.
• SINOT: the contribution is 0.60% of wages up to $9,000 per calendar year. The employer can pay it alone or share it with the employee, but the employee's share can't exceed 0.30%. Exempt employers include nonprofits, private household employers, governments and drivers covered by chauffeur's insurance, among others.

Chauffeur's insurance

If your employees regularly drive a motor vehicle as part of their job, the Seguro Social para Choferes (chauffeur's social security insurance, Act 428 of 1950) applies to you. The DTRH states that the employer pays 30 cents per week or fraction of a week worked for each covered employee and withholds 50 cents a week from each employee. A self-employed driver pays 80 cents a week.

IRS: Social Security, Medicare and federal unemployment

Wages paid in Puerto Rico are subject to federal Social Security and Medicare (FICA). The employer withholds 6.2% for Social Security and 1.45% for Medicare from each employee and pays a matching amount, according to IRS Publication 15. The Social Security portion applies up to the annual wage cap set by the Social Security Administration.

The IRS replaced the "PR" versions of its forms. According to its official notice:

Penalties

The Código de Rentas Internas (Internal Revenue Code of Puerto Rico) treats undeposited withholding harshly, because it's the employees' money:

• Not depositing wage withholding on time: a penalty of 2% of the underpayment for the first 30 days and an additional 2% for each 30 days or fraction, up to 24% (Section 6041.01).
• Failing to pay or deposit tax withheld from wages: a penalty of no less than 25% and no more than 50% of the underpayment, and up to 100% for repeat offenses (Section 6041.05). Lack of funds after paying payroll is not considered a circumstance beyond your control.
• Not filing or not furnishing withholding statements: $500 for each form not filed, filed late or not filed electronically (Section 6041.11), and $100 for each statement not given to the employee on time (Section 6041.04).

Responsible officers of an entity who fail to turn over withheld taxes can also face criminal consequences under the Code.

787TAX is an independent guide. It is not Puerto Rico's Departamento de Hacienda, the CRIM or the IRS. This page is general information, not tax or legal advice. Example figures are hypothetical. Found an error? Tell us.