If you're not getting the option to indicate that your W-2, Box 1 is reporting non-taxable Medicaid Waiver Payments under 'Uncommon Situations' you can enter an offsetting entry to exclude this income.
- Go to the Wages & Income section, scroll down to Less Common Income, and select Start/Update next to Miscellaneous Income, 1099-A, 1099-C.
- Scroll down to Other reportable income, Start/Update.
- Description: Enter "IRS Notice 2014-7 excludable income".
- Amount: Enter the exact amount from Box 1 of your W-2 as a negative number
- Finalize: You'll see this as a subtraction on Schedule 1, Line 8 of your Form 1040
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