IRS 1099-Q letter.
You've done nothing wrong (nor has TurboTax [TT]). We're seeing this frequently, in this forum. It happened to me, personally. Apparently, the IRS has created a problem by not having a form to report the situation where the taxpayer uses all the 529 plan distribution for qualified expenses. Even though you probably entered the 1099-Q in TT, nothing about the 1099-Q went anywhere on the actual IRS forms.
I replied to the IRS that it was all used for qualified education expenses. I attached a copy of my billing statement from the school and a copy of TurboTax's 1099-Q work sheet (which was not part of my original filing) and that took care of the problem (2-1/2 months later).
