If the state paid the benefit, you would receive a 1099-G.
Your benefits were paid through a third party.
How much is taxable depends on who paid the policy, the employer, employee, or both.
I would GUESS that they both paid and her portion of non-taxable benefit is in Box 12.
If there are wages listed in box 1, they are taxable.
What makes you say that TurboTax is considering this as non-taxable? Is the amount listed on your 1040?
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