Well you need to report the 1099-MISC as it is reported because the IRS also receives a copy.
Enter in TurboTax in two steps:
First, enter the 1099-MISC for the $2800 in the Less Common Income section, Miscellaneous income, Other Reportable Income. Enter a description along the lines of 'lawsuit review' and the amount.
Second, repeat the steps but for the amount, enter as a negative number and a description like 'lawsuit review amounts included in W-2 income'. In effect, you have cancelled the income amount. The two entries will show on line 21 of your 1040, but a taxable amount of zero.
Keep the 1099-MISC forms and other documentation that you have regarding the payment to your employer for your records should you need to explain.
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