Yes, the worksheet is trying to give you credit. It does this first so you need to make an adjustment. Follow these steps:
- Open to federal deductions and credits
- Select education
- Edit next to the son with the taxable distribution
- Continue through to Your Education Expenses Summary
- Edit Education information
- Continue through to Amount used to calculate education credit/ deduction (this only appears after enter both Q and T. Always enter Q first.
- Your $10,000 issue shows, change it to zero.
Finally, if there is still an issue, just follow IRS guidance and remove the Q since it isn't taxable. 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.
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