This typically happens on returns where qualified education expenses are entered (usually from a 1098-T) but the income level is too high to qualify for the American Opportunity or Lifetime Learning Credit.
Here's how to work around this limitation:
- Go back to the beginning of the Education section in the Deductions & Credits section.
- Select Revisit next to Expenses and Scholarships (Form 1098-T).
- On the Your Education Expenses Summary screen, select Edit next to Education Information.
- Answer the questions until you reach the screen Amount Used to Calculate Education Deduction or Credit.
- On this screen, change the amount to $0 if you're not eligible for any education credits. If you are eligible, subtract your 1099-Q distribution from your education expenses and enter the difference.
- Select Continue and your program will correct the calculation.
https://ttlc.intuit.com/questions/4451709-why-is-the-529-distribution-from-my-1099-q-showing-up-as-t...
