@joebob8000
Its not about where you paid the expenses from. Money from the 529 is of two types, what you put in (basis) and what you earn(income). Both can be used tax free for education but the income portion is subject to a 10% penalty if not used for education, plus your marginal tax rate on that income.
The amount in the credit line is not driven by the 1099q entries, its driven by you 1098t you entered. If that amount was greater than 10k, the 10k is being put on line 18 and you should see the rest flowing to the 529 calculations. That it is populated across the worksheet for each column does not play into the calculation. the next section down on the student worksheet after those tables shows the income calculation/offset.
If you are receiving the Lifetime Learning Credit (LLC), a full 2k then the 10k is correct. If you are getting a lesser amount its not right, or if you are actually receiving the American Opportunity Credit (AOC) it is not right. For a full receipt of the AOC (2500) you should only have 4k for that credit amount. or a lesser amount if your AIC is phased out by income. If you change it to 4k and your refund increases (assuming you have all your expenses entered) you are getting the AOC and the other 6k of expenses will get reallocated to the 529 calculations and offset that income its currently showing.
If you look on page 3 of this thready you can see my post with images of the forms explaining how i handled my situation. Or this link should take you there if the automatic moderation lets me post it:
https://ttlc.intuit.com/community/college-education/discussion/re-turbo-tax-is-not-allowing-me-to-in...
