Yes, the treaty allows for it to be taxable in Germany. This means you should report the income and then subtract it back out using the treaty as the reason for the subtraction.
Normally, retirement income is entered on 1099-R Since you are adding it and subtracting it together, I like the idea of putting them in the same place on the return.
Add the income, follow these steps:
you can move the income to to Other Income without it affecting other parts of your return, that would be the easiest.
To enter:
- You would go to personal income,
- scroll to the bottom to misc income,
- start,
- scroll to the bottom again,
- other reportable income,
- start.
- enter USD amount and description.
Remove the income:
follow the steps above but change the description to exempt under German tax treaty.
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