TT is assuming you want to use $10,000 to claim the Lifetime Learning Credit.
That reduces the amount that can be used to claim the 529 earnings, shown on the 1099-Q, as being totally tax free. 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. You may reach that screen sooner.
Change it to $4000 if you want to claim the American Opportunity Credit. Or change it to 0 if you are not eligible for a credit.
