Why is 1099Q distribution taxable when 1098t expenses are greater than distribution?

[drchristensen]

Have entered 1098t qualified college expenses and 1099Q QTP distributions (529 Plan). Qualified expenses are Greater than distributions but TT is treating a portion of the distributions as Taxable Income (the "earnings" portion of the distribution; not the "basis" portion). I have already entered the "Actual Amount Paid" in the drop down box, so this is Not the fix! 

Seems like TT software issue.

Please help!

[Anita01 · Accepted solution]

When you go through the interview for the 1098-T, if you have already entered the 1099Q, you are asked how much of the education expenses you wan to allocate to the credit.  Enter there the correct amount of expenses that are over and above the amount you need for the 1099Q to make it all nontaxable.