are you eligible for the AOC credit? if so, THAT is probably why...... but getting the credit is a good trade for a few tax dollars from the 529 distribution.
if that is not the case a few questions:
1) whose name is on the 1099Q? THAT is who has to file it. It makes things a lot easier for tax reporting if the money is sent directly by the administrator to the college..... plenty of posts over the past week on this topic.
2) are you sure you filled out everything correctly. there are a lot of questions and answering any one of them incorrectly can trip things up.
3) did you input all your qualified expenses (room and board, computer, not required books, etc.)?
4) did you input form 1098-T?
5) if you post the following, I can figure out 'why' you are getting taxed:
1) what is Box 1 and Box 5 of form 1098-T
2) what is Box 1 and Box 2 of form 1099Q. How much INCOME of Box 2 is being taxed?
3) what expenses did you add to TT (Room and Board, computer costs, not required books, anything else); I just need to know the total
