Retirement tax questions

If this is a qualified "difficulty of care" payment reported on a W-2 then enter the W-2 in the W-2 section which will add the income to the 1040 line 1 then:

Enter as "Less common Income -> Miscellaneous Income -> Other reportable Income -> Other Taxable income answer yes.  For description enter "Notice 2014-7" and the amount as a negative number  such as  -12345 which will subtract that from your gross income.

That will put it on the 1040 schedule 1 line 8 per the IRS instructions.

https://www.irs.gov/individuals/certain-medicaid-waiver-payments-may-be-excludable-from-income