You are correct that TurboTax is reducing qualified education expenses by 10K in error when there is a 529 distribution. The amount should be the 4K used to qualify for the education credit.
You can change this amount by editing the Education Information section from the Education Summary (screenshot).
Continue until you reach screen where you can change the amount to 4K (screenshot).
Edited 3/12/18 10:53 am
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