Amy,
The 1098-T information has been entered. I printed out the Student Information Worksheet. Part V - Education Assistance has in the Tax Free column both the scholarships and the Prepaid Tuition amounts. I think the problem is coming from Part VI - Education Expenses. For the Qualified Higher Education Expense for 529 Plan, lets say line 13 Total Qualified Expenses equaled 1,000 and line 15 Tax-Free assistance equaled 1,200 . Line 19 Total Adjustments would then equal 1,200. Line 20 Adjusted Qualified Expenses would equal 0.00 in TurboxTax. This 0.00 amount will be used in the "for purposes of Regular tax" in Part VIII Qualified Tuition Program lines g and h for Adjusted Qualified Higher Education Expenses and applied. When this happens it is saying that we don't have any Qualified Higher Education expenses and is using the amount from box 2 of the 1099-Q as taxable earnings.
Should we still have 1000.00 of qualified expenses instead of the 0.00 that TurboTax is calculating ? Should the difference between the qualified expenses and the scholarships of 200.00 in this example be the amount added as income ( or it looks like a percentage is being calculated based on the box 2 amount ) ?
