Part I (continued)

Line 4: Share of Interest Expense

The mortgage interest expense is subject to a separate allocation on line 4.

Taxpayers who have foreign source income (including excluded Puerto Rico source income) of:

• $5,000 or less can allocate all of their mortgage interest expense to U.S. source income and do not need to include it here.
• Over $5,000 must apportion their deductible home mortgage interest (including points) using a gross income method. Use worksheet on Form 1116's instructions.

NOTE: If an expense or deduction is not related to a specific income, it must be prorated regardless of when, where, and from which income it was paid.

Click here to see the Worksheet for Home Mortgage Interest — Line 4a.