You had indicated that the error was resolved by entering a zero in boxes 3 and 5 instead of leaving them blank.
If the employer only listed the taxable half of the settlement on the W-2, then you can enter the rest as is.
If the entire settlement payment is included on the W-2 and you have information that only half of it is taxable, you could enter the full amount in the W-2 section and make a reversing entry for the nontaxable portion:
- Go to Wages and Income
- Scroll down to Less Common Income
- Go to Miscellaneous Income
- Select Other Reportable Income and follow the prompts. Enter a description such as "nontaxable portion of settlement" and enter the amount as a negative number (minus sign before the number).
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