When you enter the information from 1099-Q into TurboTax it must be countered with the Qualified Education Expenses by entering them in the Education Section of Deductions and Credits. This is necessary for two reasons:
- If your ESA distribution did not exceed the Education Expenses the remaining amount must be considered income and be taxed appropriately in your return.
- If your Education Expenses exceeded the ESA Distribution the excess expenses can be used for the American Opportunity Credit, if you qualify.
If your Distribution equaled your Education Expenses or you no longer qualify for the American Opportunity Credit, you do not have to enter the information form the 1099-Q when preparing your Tax Return. Below is a link to a similar question that I answered recently which provides more detail on ESA distributions:
https://ttlc.intuit.com/replies/5865427
