@Hal_Al, box 1 from both 1099Qs received (one to me and one to my daughter) are fully covered by qualified expenses, but TT still calculates taxes owed by my daughter every time I enter the information into her return. So TT is not just entering nothing on the actual IRS forms as mentioned. It's calculating a $1600 tax bill to my daughter every time.
As for manipulating the numbers, I wouldn't know how to do that on my return or hers. Plus, I don't understand why I would want to make any distribution taxable on purpose. I think it has been mentioned before that by doing so, I can increase the education credit I receive for my daughter. Well due to my 2019 income, I'm already not receiving an education credit so I don't think making any portion of it taxable will help me.
This issue did not happen last year when I entered the 1099Q received by my daughter on her return. My guess for why this is an issue this year is that we made 3 tuition/room & board withdrawals in 2019 instead of 2 (as explained in my original question). It could also be that earnings in box 2 of her 1099Q are high relative to the total withdrawals made, but if all those made are covered by qualified expenses it shouldn't matter anyway.
I know this...I've had my return and my daughters fully completed and ready to submit for 2 weeks but I haven't because of this one issue. I just don't want to submit an incorrect return for either of us and have to deal with an audit. And I don't want either of us to pay taxes on 529 withdrawals that were solely used for qualified expenses if we aren't required to do so.
