On form 1099-Q, instructions to the recipient reads: "Nontaxable distributions from CESAs and QTPs are not required to be reported on your income tax return. You must determine the taxability of any distribution."
So, the 1099-Q is only an informational document. You are not required to enter it. You can just not report the 1099-Q, at all, if your student-beneficiary has sufficient educational expenses, including room & board (even if he lives at home) to cover the distribution or if the money was recontributed to the 529 plan. When the box 1 amount on form 1099-Q is fully covered by expenses (or the re-contribution), TurboTax will enter nothing about the 1099-Q on the actual tax forms. But, it will prepare a 1099-Q worksheet for your records.
That said, the TurboTax (TT) interview handles your situation. After entering the 1099-Q, you will be asked if you got a refund of expenses from the school. Then you will be asked if you recontributed any of it to the plan. TT will treat only the net amount as distribution and the worksheet will provide the details.
Technically, the re-contribution must be made within 60 days of you receiving the refund to be valid.
