1099-Q messing up TurboTax's dealing with MI state tax?

Forum|Forum|4 years ago
April 14, 2022
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This is my first year of dealing with 529 distributions. I uploaded my 1098-T information first, then typed in my 1099-Q form information. I noticed that TurboTax was taxing part of my 529 distribution, despite the fact that it should be tax-free since all of my distributions were used for qualified education expenses. Then I noticed you don't have to put the 1099-Q info in, so I removed it and all seemed fine.

But, now I am doing my MI state taxes and in Schedule 1 and TurboTax is asking me to fill in an amount for line 21, which asks "If any amount of a qualified withdrawal was included in your gross income you should enter that amount on this screen." NONE of my qualified withdrawal was included in my gross income, but I am blocked by TurboTax from putting in $0. It forces me to at least have a minimum value of $1.

I've gone back to the federal side and added a 1099-Q and then removed it to see if that would fix the error, but it doesn't. I use the web version of TurboTax so I can't just go in and see/change worksheets like I saw the desktop version can do. Any thoughts about what to do?

Here's a screen capture of where I'm stuck. Thanks for any help!

TurboTax Deluxe Online

Best answer by JillS56

Have you tried to just leave it blank? TurboTax often does not accept "0" as an answer to the question. In going into the program to test response, it will not allow you to enter "0" so just leave it blank.

JillS56Answer

Hal_Al

Employee

As to some of the distribution being taxable in the federal section:

You can just not report the 1099-Q, at all, if your student-beneficiary has sufficient educational expenses, including room & board (even if he lives at home) to cover the distribution. When the box 1 amount on form 1099-Q is fully covered by expenses, TurboTax will enter nothing about the 1099-Q on the actual tax forms. But, it will prepare a 1099-Q worksheet for your records. You would still have to do the math to see if there were enough expenses left over for you to claim the tuition credit. You also cannot count expenses that were paid by tax free scholarships. You cannot double dip!

On form 1099-Q, instructions to the recipient reads: "Nontaxable distributions from CESAs and QTPs are not required to be reported on your income tax return. You must determine the taxability of any distribution."