Who enters 1098-T when both the parents and the student received a 1099-Q (529 plan)?

[Carla Lloyd]

We have a 529 account to pay for our daughter's college expenses. We paid the school directly from the 529 account for her tuition expenses. She received a 1098-T (from the school) and 1099-Q (from the 529 plan) in her name and the amounts match. We also paid her living expenses (room & board) from this same 529 account. We received the 1099-Q in our name for the room & board expenses. My daughter works, so she has to file taxes too, but who should enter the 1098-T, us or her? We don't qualify for any educational credits, so my question is strictly about how we should enter both 1099-Q's without triggering taxes on the distribution. All the distribution was used for educational purposes (tuition, room & board), so there should be no tax implication. TIA

[Hal_Al]

Q. Who enters 1098-T when both the parents and the student received a 1099-Q (529 plan)?

A. Either one, both or nobody, depending on the details. In your case, nobody. 

The 1099-Q and the  1098-T are only informational documents. The 1098-T is not required to be entered onto your (or your student's) tax return, unless you are claiming a tuition credit.  

You can just not report the 1099-Q, at all, if your student-beneficiary has sufficient educational expenses, including room & board (even if he lives at home) to cover the distribution. When the box 1 amount on form 1099-Q is fully covered by expenses, TurboTax will enter nothing about the 1099-Q on the actual tax forms. But, it will prepare a 1099-Q worksheet for your records. You would still have to do the math to see if there were enough expenses left over for you to claim the tuition credit. You also cannot count expenses that were paid by tax free scholarships. You cannot double dip! 

References:

1. On form 1099-Q, instructions to the recipient reads: "Nontaxable distributions from CESAs and QTPs are not required to be reported on your income tax return. You must determine the taxability of any distribution."
2. IRS Pub 970 states: “Generally, distributions are tax free if they aren't more than the beneficiary's AQEE for the year. Don't report tax-free distributions (including qualifying rollovers) on your tax return