Implementation of foreign tax treaty in TurboTax

Forum|Forum|4 years ago
March 9, 2022
2 replies
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There are provisions in the US-UK tax treaty (Article 17) which are not provided for in the standard TurboTax (deluxe edition) layout. How should one proceed? One possible alternative is to perhaps add an additional item of income as a negative number - would that be OK?

As an allied issue, there is no IRS form 8833 included in TurboTax. If needed, does this mean that one has to file a complete paper return by mail?

DMarkM1

Yes, using the "Other reportable income" topic under the "Less Common Income" section does allow the taxpayer to remove income items by entering a negative number. Your form 8833 should support that treaty based adjustment; be sure to identify the adjustment reference.

Further, you are correct you will need to download the form 8833 from IRS.Gov complete it and attach it to your printed/completed return to mail in to your IRS Service Center.

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cabcan2Author

That's helpful. Thank you. As a quick follow up:

Line 8z on Schedule 1 where the correction should be made includes a place to enter the type of "Other income". Can I reference the treaty provision here rather than having to do a paper return to include Form 8833? A comment such as "Tax exempt pensions under US-UK treaty, Article 17" would provide the same information as needed by Form 8833.

JohnB5677

Yes, you can enter both the amount and the treaty offset in this program.

Go to Federal

To Wages & Income
Scroll to Less Common Income
elect Miscellaneous Income = Start / Revisit
Select Other Reportable Income = Start / Revisit
Any Other Taxable Income? = Yes
Enter 1042S in Description
Enter the amount in Amount = Continue
Any Other Taxable Income? = Yes
Enter UK/US Treaty and the amount as a negative dollar = Continue

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spapad

Hi,

I was wondering if you did file with turbo tax and did not file via mail including form 8833 ? Did that work out?

SusanY1

TurboTax does not support filing of Form 8833. You can prepare the rest of your tax return with TurboTax, making manual adjustments and then print and file the return for mail, adding in the manually prepared Form 8833. You cannot e-file in TurboTax when taking a treaty position on your Form 1040.

@spapad

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cabcan2Author

This advice has not been my experience for the last two years. The IRS has accepted a negative number entered on Schedule 1, line 8 for other income to compensate for the difference represented by the effects of a tax treaty in comparison with the standard IRS rules. However, I suspect it is important also to provide a detailed reasoning (including Treaty article number, etc.) for the negative income in the small space provided. In that way Form 8833 can be avoided and a normal e-file undertaken.

It would probably be a lot better if Intuit would support the Form 8833. It would prevent Turbotax from having to drop the term "deluxe"!

pp Christine Nelson