How to exempt foreign-sourced social security benefits with a totalization treaty

[Learner1]

This is a mechanical question rather than a tax issue question.

The taxpayer received French social security benefits, and France and the United States have a totalization agreement which says that French social security benefits are exempt from United States income tax (edit: I think it's actually the USA-France income tax treaty and not the totalization agreement that does this, if anyone cares to split hairs). 

Furthermore, the savings clause of the USA-France tax treaty specifically exempts social security pensions.

This is also not required to be disclosed via form 8833 as a treaty-based return situation.

My intent therefore is to report the French social security benefits on 6a, but I also need to exempt the French social security benefits from being taxed. How do I do so in ProSeries and via which IRS forms?

Thank you.

[Just-Lisa-Now-]

if theyre not taxable, do you need to report them at all?

[Learner1]

I'm hesitant to simply not report the French social security benefits, and also hesitant to do any overrides in ProSeries (I know you did not suggest this, but I was previously brainstorming entering the amount in line 6a and then overriding the calculations thereafter). Is there another way?

[BobKamman · Accepted solution]

If you really want to wreak havoc with IRS computers, show it on Line 6a. If you want to follow the Treasury regulations, rely on Section 301.6114-1(c)(1)(iv), which in legal terms embodies the doctrine of “Fuhgeddaboudit.”

[BobKamman]

He who hesitates is lost.  On the other hand, remember that treaty benefits aren't always recognized by state income tax laws.  I hope you're in Texas or Florida.  Well, no, that sounds like a death sentence.  I hope you're not in California, where I think there was a question a while back about taxation of some country's Social Security benefits. 

If it makes you feel better, attach a pdf explanation to the return, since no one at IRS reads attachments but it might save some research by the next practitioner who gets this client.  

[Learner1]

So you've done this before? You just simply left the French benefits off the return?

It sounds plausible and I'm willing to do it, I'm just checking to see if you've put some skin in the game before I do it.

[Learner1]

Okay thanks I'll review that code shortly.

[Terry53029]

I would report on other income and back it out as an adjustment to income, and not on 6A as that is for US SS and some countries that some of the SS may be taxable same as US SS.

[Learner1]

"Pursuant to the authority contained in section 6114 (b), reporting is waived under this section with respect to any of the following return positions taken by the taxpayer:

(iv) That a treaty reduces or modifies the taxation of income derived from dependent personal services, pensions, annuities, social security and other public pensions, or income derived by artistes, athletes, students, trainees or teachers;"

Yeah thanks for that Bob, I think that settles it pretty decisively. Close second to Lisa.