@Sarahmom - The simple solution is just don't enter the 1099-Q. If the distribution, from the qualified tuition plan, was totally spent on qualified educational expenses, you do not need to report the 1099-Q as income. So, just don't enter the 1099-Q into TurboTax (TT). When TT determines that none of it is taxable, there is no entry made anywhere on the IRS tax forms. The only paper work is a 1099-Q worksheet that is not sent to the IRS, but might come in handy if you are audited.
Here's where the problem/error is in TT:
TurboTax assumes you will claim a Tuition credit, if you are eligible. So it reduces the amount used for the earnings exclusion, on the 1099-Q, for the amount used for the credit. You are not allowed to double dip.
Since the tuition credit is more generous than the earnings exclusion, that is the best way for most people to file.
If you some reason, you are not eligible for the tuition credit, or do not want to claim it; go through the education section again. When you get to the screen that says “Here’s your Education Summary”. Click edit next to “Education Information”. When you get to the screen titled “Amount Used to Calculate Education Deduction or Credit”, verify the amount you want to use or change/delete it.
