You may claim either the AOC or the Tuition and Fees Deduction (TFD), but not both. So, you want to allocate expenses to the AOC and the 529 plan (1099-Q). You can not tell TT how to allocate to each. TT automatically applies available expenses to the AOC first.
To verify this was done, go through the entire education interview until you reach a screen titled "Your Education Expenses Summary". Click edit next to the student's name. That should take you to a screen “Here’s your Education Summary”. Click edit next to “Education Information”. When you get to the screen titled “Amount Used to Calculate Education Deduction or Credit”, verify the amount you want to use or change it.
Alternatively, you can make manual adjustments on the Student Information Worksheet (not available in online versions of TT). That will most likely prevent e-filing.
