I had the same issue and Turbo Tax step by step process is not very intuitive.
Please note 1098-T is issued by the college in your Kid's name while 1099-Q is issued by your brokerage firm under your name even if the actual beneficiary is your kid.
Here are the steps you need to follow when you are dealing 1099-Q 529 Withdrawal to fund your kids college
Step 1) Please enter your Kid's 1098-T information in your personal return and make sure your Kid is included in your personal return as dependent. You can find 1098-T worksheet by directly searching 1098-T form in Turbo-tax (select Top menu -> Forms and then search->1098-T Wks)
Step 2) After you have entered 1098-T Worksheet information, then enter 1099-Q information in your personal return and select your kid as the beneficiary.
Once you complete these two steps, you will find 529 withdrawal is not treated as taxable income in your personal return. My son is in the final year of college and in the last 3 years, I had the same issue while preparing my personal tax return. I figured out the trick hard way ... I wish turbo-tax makes it intuitive for the users so that people don't have to spin wheels to figure things on their own and get stressed out.
@Turbotax - please fix the issue by adding a step to enter 1098-T worksheet information while someone is entering ESA and 529 qualified tuition programs (1099-Q).
Hope this helps and good luck.
Steve
