Deductions & credits

That makes a difference. Dave has the right steps for the easiest entry on the pension. Then, if you have decided to mail in your return with the treaty position, you will want to back the income out using the same steps until the entry. 

You may need to file Form 8833 with your state return.

Follow these steps:

1. Select Federal
2. Select Income & Expenses
3. Locate Less Common Income
4. Miscellaneous Income, 1099-A, 1099-C
5. select START
6. scroll to the bottom to Other Reportable Income.
7. Select START
8. select YES
9. Enter description,  Italian Pension
10. then your pension amount
11. Select Continue
12. Select Add Another Income Item
13. Enter description,  Italy treaty based exemption
14. then a negative of your pension amount (use a minus sign in front)
15. Select Continue
16. click Done