I see the same 10,000 difference. My tuition expenses for my daughter are higher than the 529 distribution, but I'm being taxed on part of the distribution.
For example, the 1098-T shows $25,000 in box 1, and that's reflected in the form in TurboTax. However, while the 1099-Q worksheet in TurboTax shows the correct distribution information, e.g. $23,000, down below it shows $15,000 on line 2b under QTB Computation of Taxable Distribution, which results in including some of my supposedly tax free distribution in my income.
I don't see any question about "how much of the education expenses you want to allocate to taking education credits." when I enter the 1098-T.
