Hi AmyC,
Thank you for taking the time to respond to my question and providing clear directions to getting to the Alabama rollover section (as well as the 529 contributions); but that doesn’t appear to solve my problem.
A more detailed description:
The rollover amount that is entered on the Turbotax interview screen is for taxable distributions from Alabama 529 plans. It is entered on Alabama Form 40 Part1 Worksheet for Line 8 line g-2 (Total rollover to another qualified plan)
The problem I am having is that the rollover came from a non-Alabama 529 plan, and its earnings are recorded on AL Form 40 Part1 Worksheet for Line 8 line f (Taxable earnings from non-Alabama Plan Form 1099Q). Any rollover entry on Part1 Worksheet line g-2 (AL Plan rollovers) is not subtracted from the reported earnings on Worksheet for Line 8 line f.
I know the 529 earnings of a rollover should not be taxed. Worksheet for Line 8 line f is for distributions I received from non-Alabama plans and used for educational expenses. Those 1099Q earnings will be taxed at the state level. It seems Turbotax should not automatically transfer rollover earnings from the Federal section to the AL Forms, or Turbotax should provide a way to modify the amount of the transferred earnings.
Possible Solution?
If I mark the non-AL 529 1099Q as an AL plan in the Federal section, Turbotax reports the rollover distribution on Part1 Worksheet Line 8 line g-1 (Total Distributions from AL Plans reported on Form 1099Q) and the rollover reported on line g-2 handles the 1099Q distribution.
