The Education section can be confusing because you have options to how you want to allocate expenses, scholarships and distributions.
TurboTax will take the option that results in the best tax break for this return. Since school usually covers 5 calendar years, and the student might need to claim income, the option may or not be the best.
TurboTax will claim the distribution if that means more expenses are freed-up for the education credit if the credit is more than the tax.
You don't say if the 1099-Q was issued to you or the student. Always best to have the student (beneficiary) make the withdrawal. If the distribution ends up taxable, it will be taxed at the student's rate with is usually lower that the parents. Making a direct transfer to the school results in the 1099-Q being issued to the student.
With all that said, if you add all the expenses, and that amount is equal to the distributions and scholarships, you needn't enter either Form 1098-T nor Form 1099-Q.
(These form are used to make calculations, they are not entered to be matched by the IRS)
If there is excess scholarship, or distribution that someone must claim, you can enter the forms and let TurboTax do the math.
If you think a credit would be worth more than the tax, you can again enter the forms and let the program do the calculations.
If you decide to enter all the forms, make sure you have your income already entered (so a credit can possibly go against your tax liability) and make sure you complete the ENTIRE education interview. You know your done when you get to the "Maximize my tax break" screen.
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