You can delete your W-2 with $0 in it, or, you can put $1 in Box 1 on your W-2. It will not change your tax situation, and allow you to Efile your Federal return and State return. However, you are correct that the IRS will not accept a W-2 with $0 in Box 1.
Here's more info if you are trying to report Qualified Medicaid Waiver Payments.
@erothgarn
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