Q. After completing these steps, she has a $0 refund/tax due. So, it's not showing that she owes any taxes. Again, this is the only income being listed. This does not seem right?
A. Actually, it , probably, is right.
Every dependent gets a minimum $1150 standard deduction. So, if the taxable portion of the 529 distribution was her only income, and was less than $1150* (I think my first estimate was $800), she has no tax liability and does not even need to file a tax return.
*The calculated amount will show on line 8z of Schedule 1.
