To exclude income from taxation based on a tax treaty, you need to enter the income as you normally would, then enter a negative amount to Other Income to cancel the income out. This is so the IRS will be able to match the income reported for you with the income listed on your tax return.
You can make the negative entry to Other Income by using these menu tabs in TurboTax:
- Federal
- Income and expenses
- Less common income
- Miscellaneous income
- Other reportable income
Enter a description for the entry (treaty name) and the amount as a negative number.
It is recommended that you attach a description of the treaty on your tax return and mail the return in.
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