Income excluded by a treaty, which is on Form 1042 and not your W-2, can also be entered in “Other Reportable Income” (the same place where you’re subtracting it). So you’ll have two lines with the same $8K amount — one which says “Income from Form 1042,” and another saying “Tax Treaty Exclusion.” Your Schedule 1 will then give the IRS the complete scoop. (MarilynG1’s post above shows where to go in TurboTax to do this.)
Regarding Form 8833, many people feel more comfortable submitting it, but you can generally skip it (and thus e-file your return) if you’re only excluding W-2 income. The IRS tells us about this here, in the instructions for the form, in the third column on page 3. However, @sumonbix, be sure to read the rules before that if there’s any complicated twists to your scenario you didn’t mention (or re-post here for further discussion...).
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