How do I report the Earnings (and 10% penalty) on a non-qualified 529 distribution (it was not used for education expenses)? TurboTax wronly includes Gross Distribution.

[wgherlein]

The tax code states that only the Earnings portion of the withdrawal is taxed, not the original contribution.

[Hal_Al · Accepted solution]

Q. How do I report only the Earnings (and 10% penalty) on a non-qualified 529 distribution and not the Gross Distribution?

A. TurboTax (TT) does that automatically, when you enter the 1099-Q and indicate that it was not used for qualified expenses.  If you're getting something different, you entered something wrong. 

At the screen titled "Designated beneficiary for this 1099-Q", it's best to select "Not applicable" if you had  a non qualified distribution.