How to Exclude social security income in Lacerte? Detail: client is US citizen and foreign resident. US & foreign country tax treaty excludes social security income.

[PhoebeRoberts]

I offer no opinion as to whether you've correctly interpreted the tax treaty!

Enter SSA as normal. Enter a -1 in the field about 6 items down called Taxable social security [O]. Fill out your Form 8833 in Screen 74. 

This return appears to pass e-file specs. 

[BobKamman]

My guess is that the other country is Israel.  @PhoebeRoberts suggests filing Form 8833, the instructions for which state:

Positions for which reporting is waived
include, but are not limited to, the
following. See Regulations section
301.6114-1(c) for other waivers from
reporting.
• That a treaty reduces or modifies the
taxation of income derived by an
individual from dependent personal
services, pensions, annuities, social
security, and other public pensions, as
well as income derived by artists,
athletes, students, trainees, or teachers;

--but I suppose there's no rule prohibiting its use, even if not required. Just allow some extra time for preparing the return:

Learning about the
law or the form . . . . 1 hr., 35 min.
Preparing and sending
the form to the IRS . . 1 hr., 43 min.

I would say that if the taxpayer's country of residence is obvious from the return -- in other words, they're not filing just with a US address -- then don't report the Social Security income and see what happens.  This might cause IRS to send a letter, which will take less than 3 hours for a response.  (Such letters might be sent even when the 8833 is attached.) Or they might be smart enough to know not to send such letters to taxpayers in that country, and then you can share your experience with others in the same situation.

In normal times I would suggest pointing out the problem to one of your members of Congress, and asking for advice from IRS on how to deal with it.  But of course these are not normal times.  

[Stephen-Naftali]

Appreciate it, Phoebe.  Followed your advice.  Was very helpful.

[Stephen-Naftali]

Appreciate your advice and comments, Bob.  I am not sure if I can risk to intentionally leave off the social security income from the client's tax return.  Based on my past experience with the IRS, if I omit the SSA income the client may well get a Notice of deficiency, like CP 24 or CP 2000.  Better to play it safe rather than experiment with the IRS income matching system.  Especially if it may trigger a client's question.  Think:  "What did you do wrong that they sent me notice of deficiency?"  If the client still receives a notice I can tell them that we did all we could to avoid it.