Yes, you generally have it correct. But, not exactly.
Do not enter the 1099-Q on your return. It is not harmless.
The kiddie tax applies to full time student under 24 (not 25), whether a dependent or not.
TurboTax (TT) can handle it, but it can get tricky. Although there is space for withdrawals not subject to 10% penalty on the worksheets, you will not see that question in the interview. The calculation is "behind the scenes". TT will generate IRS form 5329 to claim the penalty exception.
Be advised some people are saying they're not getting the "Amount used to claim the tuition deduction or credit" screen in the student's interview . The alternate workaround is to enter $4000 less than the actual box 1 amount, when you enter the 1098-T on the student return (assuming you used $4000 [the normal amount to claim the maximum AOTC] on your return)
