@wilensdavid
The amount used for credit should be 4k if you are eligible to collect the entire AOC (100% of the first 2k [2k] in expense and 25% of the next 2k [500]) for a total credit of 2500. If getting the LLC its calculated 20% of expenses up to 10k in expense. TT will at the least assign 10k to line 18 (for credit) even if that amount is not required to claim that credit. It may even assign all you 1098qt amount, thereby not allowing the excess to offset your 1099q. What you need to do is before making any adjustments to the credit line is determine how much of a credit you are getting and which one. Then adjust the credit line 18 in the student info worksheet to the amount needed to secure that credit, that will allow any excess amount to flow into the calculation of the 1099q offset. TT is not doing things right with this area, but it does at least make sure you don;t double count expenses. If you have more than one dependent for which you are claiming the expenses and getting education credits you need to determine the amount of expenses that are required to maximize the credit for each and adjust accordingly to line 18 in their student info wks.
The peoples wks is where you can add expenses for room, board, computers etc for each dependent, though it looks like the interview lets you enter those now. The program just doesn't seem to function correctly for calculating credits vs allocating expenses.
The easiest thing to do is simply omit the 1099q income all together from the return if you know you have records of expenses that offset it. You would need that in the case where you got an IRS notice to prove your entries, which would be rare, though I do think its misleading and people are going to miss out on refunds as a result of miscalculations in TT.
