Q. Where on students return do I enter the educ expenses to make the distribution earning NOT taxable.
A. Nowhere. When the box 1 amount on form 1099-Q is fully covered by expenses, TurboTax will enter nothing about the 1099-Q on the actual tax forms.
The TurboTax interview is complicated and it's easy to make mistakes. Since you know that none of the distribution is taxable, just don't enter the 1099-Q, at all. On form 1099-Q, instructions to the recipient reads: "Nontaxable distributions from CESAs and QTPs are not required to be reported on your income tax return. You must determine the taxability of any distribution."
That said, you enter the 1099-Q, in TT, first, then you enter the educational expenses in the educ expenses section. TT, theoretically, matches them up. But, throw in scholarships and tax credits and the calculations get complicated.
