529 distributions (earnings) being taxed

[pjhofmann]

I have a 529 for my daughter to pay for her college tuition. I received the 1099-Q from the 529 showing the distribution split between basis and earnings. Which I then used to pay for her tuition. She received a 1098-T from her college showing the payments. All is well so far.

Filled out the TurboTax Deluxe sections on 1099-Q and 1098-T and am being partially taxed on the earnings, why is this? These should all be qualified expenses.

[AmyC]

The program is expecting to use a 1099-Q that was entered. If the 1099-Q was used exclusively for qualified expenses, it should not be entered. Tuck the 1099-Q into your tax folder. IRS Publication 970, Tax Benefits for Education states:

If the entire 1099-Q went to qualified expenses, room and board, tuition, etc then you do not need to enter the form. 

[pjhofmann]

Okay, will tuck, appreciate the response.