Education

No, do not change your entry and answer to the 529 question. You should not be taxed on the earnings for your 529 plan since it is a qualified distribution. Entering education expenses and a distribution from a 529 plan is a two step process. From your question, it seems as if you entered both sides, but if you are being taxed on it, something was entered erroneously. 

Please follow the instruction below and make sure everything below is entered. 

First, you must look at the 1098-T input. To do so, please follow these instructions:

1. Open your return in TurboTax.
2. Search for 1098-T with the magnifying glass tool at the top of the page.
3. Click the Jump to 1098-T link at the top of the search results.
4. Click edit next to the 1098-T. 
5. Enter the information as shown on the 1098-T, including all education expenses. 
6. Scroll down on the screen Did you Pay for Books or Materials to attend school? and you should see a question about whether you took a 529 distribution. Enter yes for this question. 
7. Follow the on-screen instructions to finish entering the1098-T.

Second, enter the information regarding your 529 distribution. To do so, please follow these instructions: 

1. Search for 1099-Q with the magnifying glass tool on the top of the page.
2. Select the Jump to 1099-Q link at the top of the search results.
3. Choose you as the recipient and click continue. 
4. Choose the student's name and click continue. 
5. Follow the on-screen instructions.