It depends. If you would like to make it clear to the IRS, you should report it and then enter the negative amount (-1000, as example) that should be tax free. This would provide a description and show that it was reported and subtracted because you believe it's not taxable.
It's not advisable to leave it off completely because you would be asked about it later or the IRS could make their own assumptions at which time you would need to communicate and/or clear the situation with them.
@TerryRN
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