In this case, the easiest way to handle 1099-Q is not to enter it at all. You know you had qualified expenses to cover the distribution. This was a suggestion made by my colleague @Hal_Al and I concur with his advice.
The 1099-Q is only for record keeping if it's not taxed. Expenses (including room and board) to cover the distribution, as the 1099-Q are generally used only for record-keeping if it's not taxable.
Perhaps the reason why you are being taxed on earnings is that you entered the 1099 Q first before the educational expenses. If you entered the education expenses first and then the 1099-Q, the program may recognize you have enough educational expenses to offset the earnings from the 1099 Q.
If you are adamant about entering the 1099 Q, delete it completely from the return. Close the return to save the change. open the return back and reenter the 1099 Q to see if this makes a difference.
@TaxHead
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