The only tax break for using an IRA for education is that the 10% early (before age 59.5) is waived. The distribution is still subject to income tax.
If Box 7 says "1"and not "2" the penalty exception is still allowed for education expenses. If you meet that requirement, you can ask the bank to issue a revised 1099-R showing code 2. But Turbo Tax can still do what you need without a revised 1099-R. Carefully go through the screens. and TT will ask if the distribution is subject to the early withdrawal penalty. Answer Yes (not no). A few screens later, you'll get a screen "Did you use your IRA to pay for any of these expenses". Enter the amount you used in the "Higher Education" box. That will cause TT to generate form 5329 to claim the penalty exception.
