Tax deductions and credits for taxpayers in Puerto Rico

By | March 7, 2015

Credits and deductions for taxpayers with income from sources within Puerto Rico that are exempt from US contributions. These tax rules are a little different and can affect the taxes owed. 

Residents bona fide of Puerto Rico can not claim deductions and / or credits assignable or taxable income from Puerto Rican sources that are excluded from federal tax return of the United States.Deductions and income not attributable to specific loans have to be divided among the excluded income from sources within Puerto Rico and income from all other sources, to determine the part that can be deducted or credited to the federal tax return US.


Examples of Special Puerto Rico Tax Deductions

Examples of this type not attributable to specific income deductions and therefore have to be divided include maintenance for the divorced spouse, the standard deduction and certain itemized deductions such as medical expenses, charitable donations, property taxes and mortgage interest on their principal residence. Generally, you can claim personal exemptions in full.

If you have taxable income from sources within Puerto Rico in its US federal payroll taxes, then you can claim a credit for foreign taxes paid to Puerto Rico.

However, it is not allowed to claim a credit for foreign taxes paid in respect of income from Puerto Rican sources that are excluded from the US payroll contributions. Therefore, to calculate your foreign tax credit properly, you have to reduce the amount of taxes paid by the amount of taxes allocated to the excluded income Puerto Rican sources.


VITA in Puerto Rico

The Internal Revenue Service sponsors the VCP Taxpayer Assistance for the Preparation of Income Tax ( VITA) and offers free help taxpayers in several of offices in convenient community locations. The program VITA is a program of the IRS that trains volunteers to provide assistance to taxpayers in places that are convenient to the community and prepare them free worksheets basic contribution.

Free Tax Preparation in Puerto Rico

The IRS provides support through a toll-free telephone charges. For assistance, call 1-800-829-1040. When calling this number, you can ask questions to help with the preparation of your return or questions regarding any notice you received. In certain areas, the IRS has local offices that you can visit for support; or taxpayers can call 787-622-8929 in Puerto Rico (this is not a toll-free telephone).


Other IRS Assistance in Puerto Rico

The IRS also sponsors Assistance Program and the Community Advisory Tax, which provides tax seminars to assist taxpayers in preparing your tax return. Seminars can cover a variety of topics and are designed according to the needs of your group or organization. Contact the office of the IRS nearest you for more information on these services.