Hal_Al
Level 15

Deductions & credits

 "Not including the 1099-Q info in TT does however expose you to correspondence from the IRS".  

 

That's not so.  When the box 1 amount on form 1099-Q is fully covered by expenses, TurboTax will enter nothing about the 1099-Q on the actual tax forms. (But, it will prepare a 1099-Q worksheet for your records, in case of an IRS inquiry).

On form 1099-Q, instructions to the recipient reads: "Nontaxable distributions from CESAs and QTPs are not required to be reported on your income tax return. You must determine the taxability of any distribution." 

 

I, too, received a CP2000 letter on 529 distributions, demanding tax.  And, I had correctly entered everything into TT.   I responded with school billing statements and it all went away. .  It's interesting to hear that you didn't provide em anything. That's good info to share with the many people, here, having this concern. 

 

I'm convinced the IRS needs a form (similar to 8363 and 8815) for this situation.  Then TT would be forced to fill it out!