If you enter the amount shown on your W-2 in TurboTax 2023, do you get the Uncommon Situations screen, where you can choose type of income? If so, TurboTax will automatically subtract the income for you.
Remember the IRS has a copy of your W-2, so it's best to enter as is and then designate it as non-taxable income later in the return.
If this path does not appear for you in 2023, go to the "Wages & Income" section, find "Less Common Income," then "Other income not already reported," and follow prompts about Medicaid waiver payments.
You definitely don't want to use a negative number in your W-2 entry for Box 1.
@elenarizzo
[Edited 1/16/2026 | 2:56 pm]
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