1099-Q and 1098-T questions

If you are satisfied that the 529 distribution was used entirely for education expenses (including room and board). Just keep form 1099-Q in yourtax records.

See this TurboTax article.

Also, on form 1099-Q, instructions to the recipient read: "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." 

Confirming what @MinhT1  said, 

The 1099-Q is  only an informational document. The numbers on it are not required to be entered onto your (or your student's) tax return. The interview is complicated and it's easy to make mistakes. Avoid it if you can and you probably can. 

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 don’t need it). 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.

References:

1. 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." 
2. IRS Pub 970 states: “Generally, distributions are tax free if they aren't more than the beneficiary's AQEE for the year. Don't report tax-free distributions (including qualifying rollovers) on your tax return”.
3. "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." 

Another thing for consideration; room and board are qualifies expenses for a 1099-Q (529 distribution). Rather than using all the after scholarship tuition for the 1099-Q, allocate his room and board to the distribution (also books and computer)  to free up some tuition for the Lifetime Learning Credit (LLC).  Grad students are not eligible for the more generous American Opportunity Credit (AOC or AOTC).  

Q. Can someone help me to figure out how to correct in Turbotax?

A. One problem, I've seen, and it carries over from last year, is that TT has allocated $10,0000 of expenses to the tuition credit, even though the student is not claiming the credit.  In the past, TT provided a screen  titled  “education expenses used for a tax credit”. It was usually prepopulated (often with $10K). You could change it for the amount you want to allocate to the ed credit (probably $0 in your current scenario). So far, this year, I haven't found that screen, even after the Feb 26-27 updates.

If you don't get that screen, you can check the student information worksheet. You can manually change it there (line 18*). Make the change in the first column, on the left

*line 17 prior to 2025