Entering W2 for Nontaxable Medicaid waiver payments that qualify as difficulty of care payments WITH Notice 2014-7

Hi.  I have a question:  I receive income as a caregiver for my children.  I receive a w2 form with income in Box 1 but this is non taxable in my state.  My question is this:

 

When adding the W2, do I click the box that says "Nontaxable Medicaid waiver payments that qualify as difficulty of care payments" and the do I also add the Notice 2014-7 form with the Negative amount thats in box 1 of my W2?  When clicking this box, my tax refund goes up a substantial amount so I wanted to check on this with experts before moving forward.

 

Thanks!