Why doesn't turbo tax guide the inputter with questions around tax liability of 1099-Q distributions? This needs attention.
As a self-prepared return, we ask every question related to input that is necessary. You simply need to enter the information. If you have taxable 1099-Q income, it must be entered and you should enter the Qualified Education Expenses - IRS & room and board to reduce the taxable income. When you enter the 1098-T, books, then room and board, it will reduce the taxable income. Be sure to go into the books and other supplies to find room and board.
You should not enter the form, if all income is used. IRS Publication 970, Tax Benefits for Education states:
If the entire 1099-Q went to qualified expenses, room and board, tuition, etc then you do not need to enter the form. Tuition paid for the first 3 months of the next year also qualify, see page 12, What Expenses Qualify, and page 52 for qualified distributions.
Page 45 repeats: Don't report tax-free distributions (including qualifying rollovers) on your tax return.