@user17591658047
I do need to note here, the procedure(s) for reporting the income and then subtracting it back out.
The correct procedure would be to enter an item of "miscellaneous income" in the amount of the foreign social security. This would go on Schedule 1 line 8z with a notation like "India social security" or whatever the name. Then, enter an item of negative income to offset the Indian social security. This goes on schedule 1 line 24z, you can use the treaty language suggested by @pk .
However, you can only access schedule 1 line 24z by making a manual entry using Forms mode of Turbotax installed on your own computer from a CD or download (the desktop version).
If you are using Turbotax online, you have to enter both the miscellaneous income and the negative offset in the same place, "other miscellaneous income". This places both the income and the offset on line 8z. This is not technically correct, but seems to be an acceptable answer and has been recommended in the past by Turbotax employees. (I think they should allow online entries on line 24z, but I don't get to make the rules.)
I suppose it is a benefit in the long run, to file a return that says...
8z. Indian pension +$10,000
8z. Pension income excluded by treaty -$10,000
Adjusted gross income zero, taxable income zero, tax zero
...so that you have it officially on record that you claim the treaty benefit. But it seems a bit silly.
Of course, if you have other worldwide income that is not the government pension, that is taxable in the US and you should file a return, whether or not you can claim a credit on form 1116. Only the government social benefit is completely tax-free in the US.
