Whether she is a dependent or not is totally irrelevant, for the 529 distribution(s), as long as she is the beneficiary of the 529 Plan.
As others have said, You can just not report the 1099-Q, at all, if your student-beneficiary has sufficient educational expenses, including room & board 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 her to claim the tuition credit. You also cannot count expenses that were paid by tax free scholarships. You & she cannot double dip! So, you have to coordinate the expenses allocation with her.
Provide the following info for more specific help:
- Are you the student or parent.
- Is the student the parent's dependent.
- Box 1 of the 1098-T
- box 5 of the 1098-T
- Any other scholarships not shown in box 5
- Does box 5 include any of the 529/ESA plan payments (it should not)
- Is any of the Scholarship restricted; i.e. it must be used for tuition
- Box 1 of the 1099-Q
- Box 2 of the 1099-Q
- Who’s name and SS# are on the 1099-Q, parent or student (who’s the “recipient”)?
- Room & board paid. If student lives off campus, what is school's R&B charge. You cannot claim all the rent paid, you're limited to school's R&B charge
- Other qualified expenses not included in box 1 of the 1098-T, e.g. books & computers
- How much taxable income does the student have, from what sources
- Is she trying to claim the tuition credit (is she eligible)?
- Is the student an undergrad or grad student?
- What is her age as of 12-31-22?
Here's a side issue: You say she is not your dependent. Money from a 529 plan, where you are the owner and she is the beneficiary, is considered support you provided and not her supporting herself
