After you file

To enter the tax exempt amount in TurboTax online program, here are the instructions:

• Report your full income under the appropriate section. Then enter the treaty exempt amount as negative amount (e.g. -5000) under Federal Taxes / Less Common Income / Miscellaneous Income 1099A, 1099C / Other Reportable Income.  See image below
• Download and fill in a Form 8833 from IRS to claim an exception.  https://www.irs.gov/pub/irs-pdf/f8833.pdf
• You cannot e-file.  You can still use the TurboTax program to prepare your tax forms, but you need to print them out and submit by mail along with the form 8833. 

This amount should show on line 8 of Schedule 1 and Form 1040. Although it is an offset, the IRS requires you to show that on your return for reporting purposes.