A Section 529 distribution, or some portion of it, can be considered as income, but it depends.
If a Section 529 distribution exceeds the amount of a student’s qualifying expenses, the amount of the excess must be reported as taxable income on your return.
If the distribution amount doesn’t exceed the student's qualifying expenses, none of the distribution is reportable as income.
For more information, please see Qualified Tuition Program in the IRS’ Publication 970, Tax Benefits for Education, and TurboTax’s article "What is IRS Form 1099Q?".
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