I received 1099-Q for I529 distributions when were used for my dependents college tuition. Why am I having to pay higher taxes after inputting these?

[rabarbier]

My "amount due" went from $7,900 to $11,800 after adding my 1099-Qs which were all received and then paid to the University.

[MinhT1]

If you have used the total distribution from the 529 plan to pay for education expenses (including room and board), you are not required to enter form 1099-Q on your tax return. Just keep the form in your tax records.

Please read this TurboTax article for more information. 

[Hal_Al]

Delete the 1099-Q.

The 1099-Q is  only an informational document. The numbers on it are not required to be entered onto your (or your student's) tax return. The interview is complicated and it's easy to make mistakes. Avoid it if you can and you probably can. 

You can just not report the 1099-Q, at all, if your student-beneficiary has sufficient educational expenses, including room & board (even if he lives at home) to cover the distribution. When the box 1 amount on form 1099-Q is fully covered by expenses, TurboTax will enter nothing about the 1099-Q on the actual tax forms. But, it will prepare a 1099-Q worksheet for your records (you don’t need it). You would still have to do the math to see if there were enough expenses left over for you to claim the tuition credit. You also cannot count expenses that were paid by tax free scholarships.

References:

1. On form 1099-Q, instructions to the recipient reads: "Nontaxable distributions from CESAs and QTPs are not required to be reported on your income tax return. You must determine the taxability of any distribution." 
2. IRS Pub 970 states: “Generally, distributions are tax free if they aren't more than the beneficiary's AQEE for the year. Don't report tax-free distributions (including qualifying rollovers) on your tax return”.
3. "IRS Publication 970, Tax Benefits for Education states: If the entire 1099-Q went to qualified expenses, room and board, tuition, etc; then, you do not need to enter the form." 

[Hal_Al]

One problem, I've seen, and it carries over from last year, is that TT has allocated $10,0000 of expenses to the tuition credit, instead of the more appropriate $4000 or even though the student is not claiming the credit.  In the past, TT provided a screen  titled  “education expenses used for a tax credit”. It was usually prepopulated (often with $10K). You could change it for the amount you want to allocate to the ed credit (probably $4000 in your case). So far, this year, I haven't found that screen, even after the Feb 26-27 updates.

If you don't get that screen, you can check the student information worksheet. You can manually change it there (line 18). Make the change in the first column, on the left. line 17 prior to 2025