Hi, I recieved tax treaty benefit ($8k non-taxable income). So, my W-2 mentions only the taxable income amount. How to report this tax treaty information in turbo tax?

[MarilynG1]

To claim your tax treaty in TurboTax follow these steps:

You will report your income as usual (W-2 entry) then you will enter the treaty-exempt amount as negative income under "Less common income". 

You will have to file a Form 8833 to claim the exception; however, TurboTax does not support Form 8833, so you cannot e-file.  You may use the program to prepare your return, but you will need to print out your tax forms and mail the returns along with the Form 8833 and a copy of your tax documents (W-2). 

• With TurboTax open select  Wages & Income.
• Scroll down to Less Common Income and select Miscellaneous Income, 1099-A, 1099-C.
• On the next page select Other reportable income.
• On the page Other Taxable Income enter 'Tax Treaty Exclusion' in the description and enter your exclusion as a negative amount
•  This will put your Tax Treaty Exclusion on Schedule 1 Line 21 of your 1040.

This link Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b)  is to Form 8833.

@sumonbis 

[sumonbis]

This is different in my case. The $8000 non-taxable income is already excluded from my W-2. So, if I enter $-8000 as you suggested, it takes off another $8000 as non-taxable. In this case, how should I report this treaty benefit that I received. FYI, I received 1042-S for that tax treaty. Thanks. 

[RalphH1]

Income excluded by a treaty, which is on Form 1042 and not your W-2, can also be entered in “Other Reportable Income” (the same place where you’re subtracting it). So you’ll have two lines with the same $8K amount — one which says “Income from Form 1042,” and another saying “Tax Treaty Exclusion.” Your Schedule 1 will then give the IRS the complete scoop. (MarilynG1’s post above shows where to go in TurboTax to do this.)

Regarding Form 8833, many people feel more comfortable submitting it, but you can generally skip it (and thus e-file your return) if you’re only excluding W-2 income. The IRS tells us about this here, in the instructions for the form, in the third column on page 3. However, @sumonbix, be sure to read the rules before that if there’s any complicated twists to your scenario you didn’t mention (or re-post here for further discussion...).

[sumonbis]

I don't have any other things except a few 1099-INT and multiple states return with married-filing-jointly - not sure if that makes any difference. 

@RalphH1 When you said "if you’re only excluding W-2 income", do you mean excluding $8000 from W-2? Then yes. However, I also have other forms 1099-INT. So, do you think it still makes sense to double report the 1042 amount (positive and negative) and e-file without 8833? Thanks. 

[RalphH1]

Then it appears you have no other circumstances that could create an 8833 filing requirement, and should be fine e-filing without it (the 1099-INT income wouldn’t be relevant for this purpose). But since you are excluding the $8,000 based on the treaty, I would definitely include that double-reporting (as described above).

Since it’s the IRS specifically telling us about the exceptions to filing the 8833, their system shouldn’t flag your return for reporting treaty-related income without the form. And even if they contacted you, the worst-case scenario would be you having to clarify the treaty-based position (which shouldn’t be a big deal as long as it’s correct, which we haven’t discussed here).

But if you’re concerned about this, @sumonbix, you may prefer to just mail the return in with the 8833 (as one of the most important things in taxes is being able to sleep at night!).

[sumonbis]

Sure 🙂 So, if I print out and send through mail, do I still need to include that double reporting? 

[AmyC]

In re-reading the thread -you state: The $8000 non-taxable income is already excluded from my W-2. 

If your tax forms already have the amount excluded, there is nothing extra to report. Your goal is to report taxable income to pay the correct tax. You can e-file without issue.

If your 1042 includes the taxable income, then you should make a negative entry and file the treaty statement. You will mail the return.

Reference: Claiming Tax Treaty Benefits