In Issues for Firefighters | Internal Revenue Service states: any amounts received that are not exempt under a special provision, are reported on Form W-2 as wages. It does not matter what the payments are called.
Either many employers are failing with special provisions or it is taxable. If you want to indicate that it is not taxable, you can subtract it out with an explanation under other income.
First enter the income as usual.
Subtract non-taxable income
1. Miscellaneous Income, 1099-A, 1099-C, Start
2. Scroll to the bottom
3. Other reportable income, Start
4. Other taxable income?
5. Select YES
6. Description
7. Amount, enter your negative amount
8. continue
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