Yes, you can also enter the W-2 as is and then check the box in the next screen identifying the W-2 as "Nontaxable Medicaid Waiver Payments that qualify as difficulty of care payments".
The steps that @ThomasM125 provided, entering Box 1 in the W-2 and then entering a negative number in Other Reportable Income, have worked for other users. We have suggested several different solutions to this issue because different W-2s in different states or from different agencies tend to report the Medicaid Waiver income differently.
Please also see this help article for information on how to account for IHSS/ Medicaid Waiver wages on your tax return depending on whether you received a W-2 and what information you were provided. The article was just updated on January 26, 2026.
@BarbaraLindsey
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
