You are allowed to split your education expenses between the portion used for education credits and the portion used to offset your 1099-Q distribution in the manner which is most tax efficient for you. And TurboTax can help you do that.
In all cases, the tuition should first be used to obtain the American Opportunity credit if your son is eligible. $4,000 of tuition will give you a tax credit of $2,500. Then the balance of the tuition of $10,000 plus room and board $7,000 plus computer $1,500 for a total of $18,500 is used for the 1099-Q distribution. This means that you have $2,500 out of a distribution of $21,000 which are not used for non-education expenses (11.9%). And you pay tax and the penalty on 11.9% of the earnings reported on the 1099-Q. This would be way smaller than your credit of $2,500.
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