Get your taxes done using TurboTax

Keep clicking through the screens.   The 4th screen asks for the amount you wish to exclude.   If you don't get this screen after checking YES on the exclusion question, you did not answer the residency question correctly.   There is a question when you start that asks Did you receive MA income while you were a nonresident?   You have to answer YES there to be able to allocate and exclude the income.    After answering yes on the dividends and interest question, you get 4 screens you need to click 'Continue' on, and then you get this screen where you enter just the amount that belongs to MA.

Did you enter the 1099-Q on the federal return?   You only have to enter it if it is taxable.   If the income was used for qualified education expenses, it doesn't get entered.   If it is taxable, it is entered on the federal side, and it can be adjusted on the NC state return in the Education section.  

Calculating taxable amount

If the distribution doesn’t exceed the amount of the student's qualifying expenses, then you don't have to report any of the distribution as income on your tax return. If the distribution exceeds these expenses, then you must report the earnings on the excess as "other income" on your tax return. When you pay a student’s school expenses with these funds, you cannot claim a tuition deduction or either of the educational tax credits for the same expense.