You may not attribute the excess withdrawal to basis.
This is how it's done:
Box 1 of the 1099-Q is $20,000
Box 2 is $5,000
Qualified expenses: $7500
7500/20,000 =37.5% of the earnings are tax free
0.375 x $5000 = 1875
You have $3125 of taxable income (5000 - 1875)
You enter the 1099-Q and expenses. TurboTax does the calcs and puts the taxable amount online 8 of Schedule 1 as other income and notes it as 1099-Q taxable
