I had an excess distribution from my son's Michigan Education Savings Program account.
The instructions for Line 8 of MI's Schedule 1 say in part: "Add, to the extent not included in AGI, the amount of money withdrawn in the tax year from ... [an MESP account] ... if the withdrawal was not a qualified withdrawal ... You may first exclude any amount that represents a return of contributions for which no deduction was claimed in any prior tax year."
If I understand correctly, Michigan taxes neither contributions nor earnings in its 529 plan. I would expect, then, any excess distribution attributable to the basis on my 1099-Q needs to be added back in the year in which it was taken, and that's what the above instructions are telling me to do. (The excess distribution is in AGI, which is the starting point for the MI return, so that's already handled.)
I've completed the interview in TurboTax and am confident that the numbers TurboTax enters on my federal return are correct. However, when I inspect my state return using "Forms" view, there is no entry on Line 8 of the Schedule 1. Shouldn't there be? Is this a TurboTax error, or is my understanding above incorrect/no entry on Line 8 of Schedule 1 is appropriate?
