Q. it appears under Misc. Income.?
A. If TT determines that any of it is taxable, the taxable amount will appear on line 8z of Schedule 1, and identified as "Qualified Tuition plan from1099-Q".
Q. it appears it does not impact your taxes ?
A. If there's an amount on line 8z, the only way it does not impact your taxes is if line 16 of your 1040 (calculated tax) is already 0.
Q. I ended up paying for expert help; she suggested that I not delete the 1099-Q?
A. Not reporting stuff to the IRS is usually not a good idea. But there are exceptions to that rule. This is one. 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. Nothing is sent to the IRS. Every expert, in this forum, including TT employees recommends deleting the 1099-Q, if you know none of it is taxable.
Are you claiming the American Opportunity Credit (AOC)? If you are, and/or if the student has scholarships, then some of the 529 earnings may be taxable. And that may be what you're seeing. If you are not claiming the AOC, why not?
