I don't understand what this worksheet is doing. I have over $100k in investment and other income, and about $30k in social security benefits. Line 1b counts a benefit exemption for living in a foreign country - but I have never lived outside the US (the program has my correct address and state and knows I live there all year).
Why is it deducting all of my SS? Why is it assuming I live overseas?
Because in the Social Security section of the program, after you entered the information from the SSA-1099, you were asked if you lived in one of the foreign countries listed, you must have indicated YES.
Go back and review your entries -
To enter Social Security benefits reported on form SSA-1099
Click on Federal Taxes (Personal using Home and Business)
Click on Wages and Income (Personal Income using Home and Business)
Click on I'll choose what I work on (if shown)
Scroll down to Retirement Plans and Social Security
On Social Security (SSA-1099, RRB-1099), click the start or update button