How to report no tax on social security benefits because of tax treaty between Israel and US?

[halpernamaru]

Article 21 of tax treaty between U.S. and Israel indicates no tax on social security benefits if live in Israel. How do I report this on electronic 1040?

[ErnieS0]

You would enter the social security income in TurboTax as you normally would, then enter a negative amount as a deduction from Other Income in an amount equal to the taxable social security (see line 6(b) on form 1040.) 

The two numbers will cancel themselves out, leaving you with no taxable income from your social security. Cite the treaty by completing Form 8833 and attach it to your tax return. This form is not available in TurboTax.

Enter your SSA-1099

1. Type 1099-ssa in Search in the upper right
2. Select Jump to 1099-ssa
3. Follow the screens and enter your Social Security info

Find your taxable Social Security amount

1. Click on Tax Tools in the left column
2. Click on Tools
3. In the center column, tap View Tax Summary
4. In the left column, tap Preview my 1040
5. Your taxable Social Security amount will appear as “Taxable Amount” in Form 1040, line 6b
6. Write down that amount, then tap Back in the left column

Enter the adjustment to Other Income by using these menu tabs in TurboTax

1. Click on Federal in the left column,
2. Select Wages & Income
3. On the Your Income screen, tap Add more income
4. Find Less common income, select Show more
5. Start Miscellaneous income, 1099-A, 1099-C
6. Start Other reportable income
7. Say YES to Any Other Taxable Income?
8. Enter a description for the entry (Treaty name) and the amount as a negative number.

[halpernamaru]

Thank you for the reply.  I understand how you are working around the problem. However, according to the Instructions to Form 8833, one does not file this form if exemption of social security benefits is  based on a tax treaty.  So why would I attach it, particularly since it is not available in Turbo Tax?

I suspect my best route is to go back to snail mail filing!!  Electronic filing does not

seem appropriate for those of us who live abroad.  Too many issues.... 

Best wishes,

Betsy

[sblevine]

Do NOT use the proposed solution if you are also filing a state return, as the Turbotax state does NOT include your SS in it's calculation but DOES deduct the negative amount in the other income section.

[LindaS5247]

It appears from your question (I don't know all of your facts and circumstances) that you would have to report this via Form 8833 with your tax return, and mail your tax return as you have indicated.

TurboTax does not support Form 8833.

Social Security Benefits Received by a U.S. Citizen Residing in Israel. Article 21 of the U.S. – Israel Income Tax Treaty states that U.S. citizens who are Israeli residents are eligible to exclude U.S. Social Security benefits from their adjusted gross income. 

Click here for information on tax treaty benefits. 

Click here for information regarding Form 8833.