You have to put in your 1099Q even if you used all the distributions for education expenses because Turbo Tax calculates a running basis with all variables including education credits. Last year I forgot to consider the education credit for one of my sons and the distributions I took ended up being more than allowed because of credit (you can’t double dip). I didn’t take more than expenses, but after the credit, the access ended up being taxable. He didn’t have to pay a penalty, but he had to pay the tax. If you don’t input your 1099Q, you’d have to keep a manual basis, and the calculation is ridiculous. When I first started taking distributions for my son, I was told I didn’t need to input 1099Q. To get his basis I had to go back several years to figure out the basis. There is a worksheet in Pub 970. Please stop telling people they don’t need to input their 1099Q because you do to get your basis & pay tax if you take the credit over distribution. Credits are usually the better option.
