Question

Why is part of my 1099-q taxable? I had tuition of $15707 and withdrew 16106 from my 529 with a basis of 12,230 and gains of 3876. Turbo tax says I must report $96 income

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TurboTax's calculation is correct. You have to pay income on that part of earnings not used for qualified education expenses.

In your case, the calculation is as follows:

Distribution not used for tuition: $16,106 - $15707 = $399 which is equal to 2.48% of $16,106.

Therefore, taxable income is 2.48% of the earnings of $3,876, which comes to $96.

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