Get your taxes done using TurboTax

No.  you will not enter anything in Box 12. When you check the box under let's Check for Common Situations>non-Taxable Medicaid Waiver Payments that qualify as Difficulty of Aid payments, there will be a screen that appears next that asks how much of Box 1 of the W2 are these types of payments. Here you will record an amount which will reduce your taxable income by the amount you record. Here is a screenshot that illustrates what I just said.