Recommend you review Tax Topic 901 which specifies US govt employees in Puerto Rico must include their wages on a US tax return. Quote from TT901:
"However, if you are a bona fide resident of Puerto Rico and a U.S.
government employee, you must file a U.S. income tax return reporting
all income received for performing services for the U.S. government,
including services performed in Puerto Rico as a U.S. government employee.
If you are a member of the U.S. Armed Forces or a civilian spouse
of an active duty member of the U.S. Armed Forces, special income
tax filing rules may apply to you. For more information, please refer
to Publication 570 and Notice 2012-41."
However, Pub 570, Chapter 3 indicates he needs to file a Puerto Rico tax return in addition, pay taxes, then obtain a foreign tax credit on his US1040 for taxes paid to Puerto Rico. From Pub 570:
"U.S. Government employees.
Wages and cost-of-living allowances paid by the
U.S. Government (or one of its agencies) for working in Puerto Rico
are subject to Puerto Rico tax. However, the
cost-of-living allowances are excluded from Puerto Rico gross income up
to the
amount exempt from U.S. tax. In order to claim this
exclusion, you must:
-
Include with your Puerto Rico tax return evidence to show the amount received during the year, and
-
Be in full compliance with your Puerto Rico tax responsibilities.
These wages are also subject to U.S. tax, but the
cost-of-living allowances are excludable. A foreign tax credit is
available in order to avoid double taxation."
See:
https://www.irs.gov/taxtopics/tc901.html
https://www.irs.gov/publications/p570/ch03.html#en_US_2014_publink1000221281
