I agree with AmyC, delete the 1099-Q, since you have sufficient expenses, even after claiming the AOC.
You can just not report the 1099-Q, at all, if your student-beneficiary has sufficient educational expenses, including room & board 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.
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."
That said, TurboTax using $10,000 instead of $4000, for the credit, has been a common problem. To edit it, Go through the entire education interview until you reach a screen titled "Your Education Expenses Summary". Click edit next to the student's name. That should take you to a screen “Here’s your Education Summary”. Click edit next to “Education Information”. When you get to the screen titled “Amount Used to Calculate Education Deduction or Credit”, verify the amount you want to use or change it. You may reach that screen sooner.
Another issue: you say "Room and Board (Rent) 9,925".
529 distributions can be used for off campus living. But the amount is limited to the lesser of actual cost or the school's "allowance for cost of attendance" (essentially what on campus students pay).
