Hello Turbotax community
I have a son in college. We are fortunate in that he received $22,000 in scholarships from his college. I withdrew $22,000 from his 529 plan, along with $1,889 in qualified educational expenses in 2022. This is a mostly taxable event as I owe money on the earnings associated with the scholarship withdrawal, but I am exempt from the 10% penalty for the scholarship withdrawals. I owe no tax on the $1,889 in qualified educational expenses withdrawals.
I received two 1099-Qs named as the recipient. One for $11,000 with the associated gross distribution, earnings, and basis boxes filled. This was for one scholarship withdrawal. The second 1099-Q was for $12,889 with the same boxes filled. This was a $11,000 scholarship withdrawal and the $1,889 in aforementioned qualified educational expenses.
QUESTION: I started entering the first 1099-Q with the $11,000 gross distribution and associated earnings and basis in the Federal Taxes>Deductions and Credits>Education>ESA and 529 qualified tuition program (Form 1099-Q) section. After I entered it, there was no change in Federal tax owed (it should have gone up). Further, I don't see the appropriate entries on any tax forms. I didn't enter the second one yet ($12,889 distribution) because something is not right with this first 1099-Q entry. How do I enter these 1099-Qs into Turbotax and designate $22,000 of the $23,889 in total 529 distributions as taxable, 10% penalty free scholarship withdrawals?
Thanks for your time in advance.
