@JP1121
(a) " If I add a negative income to offset the 20K income, why isn't it $20K? "
Note that when you report your total Social Security income ( Box 5 of SSA-1099), TurboTax goes through a computation using 1/2 of your SSA income plus all your other world income to compute the taxable portion of the SSA income --- form 1040 line 6a shows the total SSA income and the taxable portions is shown on line 6(b) of the same form. Line 6(b) is anywhere from 0 % to 84% of line 6(a).
(b) In order to exclude US tax on your SSA income, you need to use the taxable portion of SSA and render it to zero, Thus you achieve the result of zero taxation on SSA by the US.
(c) Here I would also like to point out ---
1. Per TT instructions for entering SSA income, the screen suggests that perhaps you not report US SSA income if a US person resides in certain countries ---here is the screen:
- Canada
- Egypt
- Germany
- Ireland
- Israel
- Italy (and you are an Italian citizen)
- Romania
- United Kingdom
Personally , I disagree with "not reporting" the SSA income -- no matter the situation. This is because , till you recognize the income and comment on why you are excluding the income from US taxes ( and absent human intervention) the AUR system will see a mismatch and issue CP2000 ( and the follow-on discussions ). And then there is the perjury jurat. Therefore I think the cleanest / correct way ( a bit more involved ) is to recognize the income and show cause as to why excluded from US taxable income and therefore no taxed by the USA.
IMHO
Is there more I can do for you ?
