I have a similar situation. We took a distribution for the merit scholarship amount from our 529 for our son. Grandparents are paying for all of the expenses not covered by the merit scholarship (it covers only tuition) - however - they are using a 529 they created for our son. Not sure how to enter it. We recognize that we need to pay taxes on the 529 scholarship distribution we took. We don't have an issue with this, but not sure how to enter expenses in Turbo Tax to reconcile this.
