Okay, so lets walk through this.  You have $5215 of qualifying Q expenses.  First step is to make sure they are also qualifying T expenses.  The ProSeries T worksheet is good.  You are looking at costs such as tuition, required fees, books, but NOT room and board.  Assuming you have $4000 of T expenses, and you use those for the credit, you now only have $1215 of remaining Q expenses.  But if you didn't take the credit, your qualifying expenses would have been MORE than the Q gross distribution of $4621.  In this case, there is NO penalty.  You do NOT get penalized for choosing one federal benefit over another federal benefit.  However, in your case, you have entered something wrong as all $1691 will NOT be taxable.

The recipient of the Q will end up with taxable income.  Make sure the Q worksheets and the T worksheets are linked together and the program will compute this perfectly.  If this is a  situation where the dependent got the 1099Q and you are doing that return also, re-enter the exact same info on their Q and T worksheets.  The program will not compute a credit because you will have the person marked as a dependent but it will result in the exact same amount of the taxable Q.  If it isn't exact, you entered something wrong.

This gets more complicated if there is more than one Q going to more than one person, but the concept is identical. The program will tell you for each Q how much each recipient will be taxed on.  AND THIS IS VERY IMPORTANT: if there is more than one Q going to more than one person, the ONLY way to compute this properly is to enter every Q, even grandma's who lives 500 miles away and uses TurboTax.