I, too, find wording, on the internet, saying it's taxable:
"Non-Qualified Distributions Taxes, Penalties, Recapture
A non-qualified withdrawal from a Virginia 529 is subject to Virginia taxes on the full amount to recapture prior year tax deductions." https://thecollegeinvestor.com/529-plan-guide/virginia/#t-1588535234267
Where I can't find it, is in the VA tax form instructions or on the VA tax forms. The fact that the VA tax people told you to use code 99 (the catch all) tells me it may not be so. Every other state covers it, in the instructions, and even has a specific line, on the forms, for it.
