For this year, you can add qualified educational expenses by the 1098T for the qualified educational expenses related to the 1099Q. BUT your ability to enter those expenses depends on the order in which you enter the 2 forms. If you enter it with one order, there is no place to put those expenses under the 1098T but with the other order you can. You have to play with both orders until it is finally possible. Plus, you would think you would write the numbers in by the 1099Q but that is not the case. Hopefully, they will fix the glitch.
For past years, you can amend the taxes by taking out the 1099Q. I spoke with a tax attorney and this is what she suggested writing. You can change the paragraph to just 2020 since that is the only year you need. I hope this helps!
"There is a limitation to the TurboTax software that does not allow you to input qualified educational expenses related to 1099-Q distributions. As such, our 2019/2020 Form 1040 was incorrectly treating the distributions reported on 1099-Q as Other Income and calculating a corresponding 10% penalty tax. 100% of the distributions reported on 1099-Q were used for qualified educational expenses. Due to this software limitation, we are amending our 2019/2020 Form 1040 to remove the incorrectly reported other income".
