As a retiree living abroad for a majority of the year in Italy with my dual citizenship, I answered the following TurboTax question with a "Yes".
As a result of answering "Yes" to this question, line 6b of my 1040-SR was set to $0 (the taxable amount of my social security benefits). This interview question complies exactly with page 5 of IRS Publication 915 for U.S. citizens residing abroad. and states "U.S. citizens who are residents of the following countries are exempt from U.S. tax on their benefits."
The problem is that after submitting my completed tax return, the IRS sent me a notice stating that "Your 2024 Form 1040-SR tax return was changed to correct an error." The IRS was not satisfied with the $0 taxable amount for social security benefits entry on line 6b and billed me exactly the taxable amount for social security benefits as if I answered "No" to the question "Are you a U.S. citizen living abroad in one of these countries". My complaint is with TurboTax because there is nothing in the return to justify to the IRS the $0 entry on line 6b. Nowhere on the return does it state that I am a dual citizen living abroad in Italy. In my opinion TurboTax is not handling this question sufficiently and I suspect that an additional form is needed. Is Form 8833 the needed form? The form description says "Dual-resident taxpayers use this form to make the treaty-based return position disclosure..." but this form is not available in TurboTax Deluxe. Now what do I do? Pay the taxes?
Dear Intuit, please use this posting to improve TurboTax return filings for retired citizens receiving social security benefits while living abroad. I think the TurboTax interview question "Are you a U.S. citizen living abroad in one of these countries?" is a relatively new question in the TurboTax interview (appearing first in 2023?). Clearly the IRS is not satisfied with a simple "Yes" to this question.
