Despite the fact that it is unnecessary to file Form 1099-Q, TurboTax nevertheless invites the User to an interview regarding it, and then incorrectly leads to the conclusion that distributions are TAXABLE (when they are NOT). This happened to me despite answering all questions correctly, and starting over fresh and trying again several times. I pay my college student's qualified expenses, and then collect reimbursement from the 529 which I oversee. The only way I can get TurboTax to back off of this erroneous conclusion is if I check the box that indicates that she received the distribution (she does not receive the distribution).
Another example of how poorly crafted the interview for 1099-Q is, is for the question Turbo Tax asks about Box #6 of the 1099-Q. The wording goes like this: "Is the recipient of the distribution the designated beneficiary? Recipient is not designated beneficiary". Notice that the question (i.e., the words ending with a question-mark) does not have a "not" in it, and is then followed by additional words for some bonus confusion. However, the wording on the standard 1099-Q does indeed have a "not" in the wording for Box #6 as follows: "Check if the recipient is not the designated beneficiary". So, how to best answer the question posed by Turbo Tax? Do we assume we know the intent, or do we follow instinct, or do we flip a coin? Or, does it even matter, because either a "Yes" or a "No" for this question does not change Turbo Tax's conclusion that I now owe about $12,000 more than what I really owe.
