@johnsonweb - You say "Box 1 of the 1099-Q ($52,628) already includes the $10,000 scholarship". I think you mean box 1 of the 1098-T. Then, you say "Without the scholarship, Box 1 would have been $62,628. Our $52,628 is our actual qualified educational expense." That may be correct, but it is NOT the way schools usually do it. And that is why TT is doing it that way. The box 1 amount usually includes all tuition paid, whether by the student/parent or scholarship or loans. You need to verify that against your financial records.
If you are correct, the solution to your problem is real simple: just delete the 1099-Q (don't enter it at all). None of it is taxable. If you insist on entering it, In the 1098-T screen, click on the link "What if this is not what I paid the school" underneath box 1. Enter $62,628.
On form 1099-Q, instructions to the recipient reads: "Nontaxable distributions from CESAs and QTPs are not required to be reported on your income tax return. You must determine the taxability of any distribution."
