Internal Revenue Service United States Department of the Treasury
Level Basic Advanced Military International

Itemized Deductions

Determining the Allowable Portion

Calculating the Allowable Portion

Case Study

Juan and Judith are Puerto Rican residents under age 65 who use the Married Filing Jointly filing status. Juan earned $39,780 working for the federal government during this tax year. Judith made $19,520 from her job at a bank in Puerto Rico.

They have a total of $16,223 in itemized deductions that do not apply to a specific type of income.

The formula for calculating the allowable portion of a deduction is:

(Gross taxable income subject to U.S. tax / Gross income from all sources) x
Deduction = Allowable portion of deduction

What is the allowable portion of each of these deductions?

Expense Amount Allowable Portion of Deduction

Medical and dental expenses

$3,457

?

Real estate taxes

$1,200

?

Mortgage interest on their home

$9,480

?

Charitable contributions (cash)

$2,086

?

Juan and Judith.