Check to see if your tax return includes Form 8863 and any amount on Schedule 3 line 50. If TurboTax is using the education expenses for either of these credits and is treating a portion of the 529 distribution as taxable as a result, even though the 10% additional-tax column shows an amount, that portion of the distribution is not actually subject to the 10% additional tax on Form 5329 Part II.
