My son started college last year. We paid for his college from a 529 account directly to the university. He has received a 1098-T form: payments: $9481, Scholarship or Grants: $5857.
He has also received a 1099-Q form: Gross distribution: $11,188, Earnings: $2370, Basis: $8818
He files separately. Turbotax says that he owes money on his Federal because of the $2370 earnings on the 1099-Q form.
I thought that since all that money was spent for college, the earnings would not be taxable. What am I missing?
