Hi... I live and work in the state of Florida(resident). My wife lives and works in Puerto Rico(resident). Her salary(stipend), according to the local tax law, is exempt from state taxes in Puerto Rico (she pays Medicare and SS tax).

If I file my federal taxes, married filing jointly, does her salary (stipend) pay taxes at the federal level?

To my understanding Puerto Rico residents do not pay federal taxes. The IRS has contacted me asking for owed tax money from the money she earned in Puerto Rico.
Is this because we filed jointly or are they incorrect in their claim?

I understand that filing jointly would mean I have to declare all world-wide income... but does that mean it pays taxes, even though earned in Puerto Rico?

Thank you for any help...

It seems to me that when you filed jointly, you would have to cite the tax exemption on Form 8833 in order to exempt her Puerto Rican pay.

Otherwise, the pay becomes subject to U.S. income taxes.