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New Member
posted Jun 1, 2019 5:45:36 PM

Does anyone know why TT is taxing my 529 distribution? Paid $19,000 to school, but it zeros that section because income is too high. Then taxes the earnings from 529.

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1 Replies
Intuit Alumni
Jun 1, 2019 5:45:37 PM

Sometimes the program will initially allocate 10,000 education expenses towards a credit if there is no income yet entered, and this might not be the best choice for you since you can't claim a credit. 

Please go back to the "Education" section. (Federal, Deductions & Credits, Scroll down to Education).

Get to the "Education Information" section (the last option on the "Here's Your Education Summary" screen.

Re-answer the interview questions until you get to the last screen. This screen should show how much of the education expenses are being allocated to a credit. 

If you want all the expenses to be applied to the scholarships/grants/1099-Q distribution, change the amount to 0.

In your case, since you can't claim a credit, make sure this is allocating 0. Change it to 0 if necessary.