Q. Can you explain this?
A. The interview is complicated and it's easy to make mistakes.
One possibility is that TurboTax allocated part of your dependent's college expenses to claim the Tuition credit, even if you are not eligible or otherwise did not claim it. That reduces the amount that can be used to claim the 529 earnings, shown on the 1099-Q, as being totally tax free. Go through the entire education interview until you reach a screen titled "Your Education Expenses Summary". Click edit next to the student's name. That should take you to a screen “Here’s your Education Summary”. Click edit next to “Education Information”. When you get to the screen titled “Amount Used to Calculate Education Deduction or Credit”, verify the amount you want to use or change it. You may reach that screen sooner.
You can still delete the 1099-Q and 1098-T, since they don't need to be entered.
You haven't commented about room and board and books and computer expenses or the possibility of claiming the American Opportunity (Tuition) Credit (AOTC). The AOTC could be as much as $2500 in your pocket.
