@friscoKM ,
(1) say your Social Security for the year 2023 was US$25657 ( before deduction for Medicare B -- which you probably do not contribute to anyways ) And Portugal recognizes this whole amount as your Foreign source income and taxes you $2500 equivalent in Euros
(2) You tell TurboTax you have Social Security income of US$25657 and US taxes 18000 of it.
(3) Under Credits and Deductions you tell TurboTax you have Foreign income of 18000 because that is portion of Social Security being taxed by both countries. On form 1116 you also use the category of "Resourced by Treaty as mentioned in my earlier response. And the amount of Tax paid to Foreign Taxing authority is ( 18000/ 25657) X 2500 -- allocating the taxes paid to Portugal based on the amount that is being taxed by both countries. This purist view is my position.
(4) Amounts entered as foreign income on form 1116 will not go back to form 1040 and increase your AGI. However, you should confirm this by using forms mode .
(5) Please enter the resourced income ONLY on form 1116 as foreign income and only for this category, else it may end up adding to your AGI
Does this help
