TurboTax is absolutely horrible at 529 plan withdrawals. If there is a TT moderator, please pass this along to someone who can improve this. 2 years ago, I had to manually go into the forms to add taxable earnings for reimbursed scholarships for my son. Last year, I gave up and filed with HR Block online and it handled it with no issues. This year, even though there were no taxable earnings on reimbursed scholarships and everything was tax free for qualified educational expenses, TT still classified it as taxable. I was never asked if it was for qualified expenses and TT just considered it all taxable. Once again, HR Block online. My daughter is a freshman and looking closer at her taxes (she owes $0), I thought TT did it correctly for her, but it just applied the standard deduction for her and covered the amount. TT - please fix this.
It should be simple -
Did you received 529 payments?
How much was qualified educational expenses? (non-taxable)
Was the remainder for reimbursement of scholarships or a dropped class? (taxable on earnings as income)
Has anyone else experienced similar issues?
