I don't know anything about PTO (or Lacerte) but according to the 1040 instructions (2022) pages 86-87:

Examples of income to report on
line 8z include the following:

Loss on certain corrective distribu-
tions of excess deferrals. See Retirement
Plan Contributions in Pub. 525.

Are you saying Schedule 1 Line 8z will not accept a negative entry?