Yes, but not as income.
First enter the 1099-Q (for the 529 distribution) in:
Deductions & Credits > Education >
ESA and 529 qualified tuition programs (from 1099-Q)
Then enter the qualified educational expenses:
Deductions & Credits > Education >
Expenses and Scholarships (Form 1098-T)
When you get to Here's Your Education Summary, scroll down and start Scholarships/Grants (for all schools)
This will offset your qualified educational expenses.
