The program is taking 4,000 expenses for the education credit since that is more valuable than the amount of tax you pay on that portion of taxable distribution.
At the conclusion of the Education Interview in TurboTax, it should have stated the credit which it advised you take. You can change that if you want.
Type letme into the search box
Click the "jump to letme" link that appears.
The program will direct you to a screen where you can see which credit(s) you are eligible for and allows you to make a selection.
The IRS allows you leeway and options for how education expenses, distributions, and scholarships can be reported so that the Taxpayer may get the better tax break.
Please look at IRS Pub for more information.
IRS Pub 970
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