Does the taxpayer happen to be a police officer injured in the line of duty? I've seen another post that referred to the same TAM, but the TAM number seems to be incorrect. In the other post (on the ProSeries community) https://accountants.intuit.com/community/proseries-tax-discussions/discussion/excludable-compensatio...

the taxpayer was a police officer and it appeared the employer did that same thing and referred to that same TAM number. But that TAM doesn't show up in the research services. 

It seems like the best course of action from the taxpayer's point of view is to ask the employer to correct the W-2 so the nontaxable compensation is not reported in Box 1 of the W-2. It seems like the nontaxable wages would then be shown in Box 12, Code J as Sick Pay, probably.

Even if you think the exclusion advice from the employer is correct, if you just manually reduce the wages in the program, the taxpayer will almost certainly receive a matching notice when the wages don't match the W-2. And there's no subtraction on the Schedule 1 that seems to match the situation, likely because the IRS would expect all wages in Box 1 to be taxable wages. Forcing it on to Line 24z of Schedule 1 will probably mean paper filing since the instructions for that line say to leave Line 24z blank and using that line could trigger an inquiry from the IRS since it would be unexpected.

If the employer won't correct the W-2, the IRS has a process for requesting IRS assistance with an incorrect W-2

https://www.irs.gov/faqs/irs-procedures/w-2-additional-incorrect-lost-non-receipt-omitted/w-2-additi....

Hope this helps.