This can be real simple.
Don't enter the 1099-Q, at all. It's fully covered by expenses. None of it is taxable.
Surely a full time student has at least $4000 of room and board expenses (and/or the school's charge for on campus students is that much). So, you allocate $4000 of room & board to the 1099-Q. That frees up $4000 of tuition for you son to claim the tuition credit of $2500).
None of this allocation needs to be entered in TurboTax. He simply enters the 1098-T on his return. TT give him the credit, using only $4000 of tuition (not the whole $15484). You just keep this math on file if the IRS comes knocking (highly unlikely)
