You are correct. The income is not taxed on the Federal income tax return.
The complication is that your tax-exempt Medicaid waiver payments from in-home supportive services (IHSS) may be on a W-2, 1099, or no form at all, depending upon where you live.
How the income is reported in TurboTax depends upon how (or whether) the income was reported to you. See this TurboTax Help.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"