Report the income in the social security section of your tax return (to satisfy the IRS), then make an adjustment on the line 21 of the 1040.
Follow these steps:
- Select Federal
- Select Income & Expenses
- Click to Show All
- Scroll down to the last one Less Common Income
- Miscellaneous Income, 1099-A, 1099-C
- select START
- scroll to the bottom to Other Reportable Income.
- click START
- select YES
- Enter description, US exempt due to Article 17(3)
- then a negative number.
- click Continue
- click Done
Turbo Tax does not directly support a treaty based position. You can do this by filing Form 8833- Treaty Based Return Position Disclosure. You can use TurboTax to prepare your tax return to print and mail with Form 8833 attached. You can access the Form 8833 HERE.