Each child's 1099Q and 1098T are dealt with on an individual basis.  If there is one 1099Q for child A with earnings showing a distribution approximating the qualified expenses for tax credit purposes, and the parents are taking the tax credit, then child A is going to end up with taxable income.  Do NOT net anything from the Q form against the 1098T amounts.  That is 100% incorrect.

For all the bad stuff I say about ProSeries, I do need to give them credit on the education stuff.  If you complete the Q worksheets and the education worksheets PROPERLY (that is the key), and link them together, the program computes the tax perfectly and tells you exactly who will be taxed.  In the circumstances you described, it will be the child.