I am helping my dependent college-age daughter with her federal tax return. She is the recipient of a College Illinois 529 plan. As the parent, I inputted her 1098-T into my tax return. She earned about $4,500 last year. Up until I got to the 529 section, TurboTax showed a refund of $187. Once I entered her 1099-Q form, which shows box 1 at $8,433, box 2 at $2,403, and box 3 at $6,030, TurboTax then showed that she now owes $254. I thought that the College Illinois 529 plan was tax-free. Did I input something wrong? Am I required to input her 1099-Q form? Thanks.
