TurboTax is erroneously assessing a penalty - Post 9/11 GI Bill vs 529 withdraw

[hvyplt]

Per IRS Pub 970, Exceptions 3.b., I should not be subject to the 10% penalty for a 529 withdraw when using the Post 9/11 GI Bill to pay for my son's education.  But, I cannot figure out how to make TurboTax remove the penalty from IRS Form 5329, line 10.  Thank you for your assistance.  

[ThomasM125]

I assume you entered a form 1099-Q to report the distribution from the education savings plan. If you did not also enter the education expenses associated with the distribution, then the distribution will be taxed and subject to a penalty.

If you used the distribution for qualified education expenses, including room and board, then you don't need to enter the form 1099-Q on the tax return. You need to keep in mind, however, if you claimed your son's education expenses on your tax return, they are only available to be used to absorb your the education plan distribution to the extent you did not use them for your education credit.

You also need to keep in mind that you can't use room and board to qualify for an education credit, so to the extent of your room and board expenses, the education plan distribution is not taxable.