No. The 1099Q can be tucked into the tax folder as it isn't entered since they were used completely for qualified expenses. The 1098T goes on the tax return where the student is claimed, Which would be your return. Except, it does you no good so you don't have to enter it on your return.
Reference: IRS Publication 970, Tax Benefits for Education. which states: Tax-Free Distributions
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.
As for your student, additional scholarship would need to be claimed.
I recommend you make a really good list to put with your tax returns showing the money trail.
- Start with the 529 since that could have penalties we don't want.
- List the 529 money and subtract all possible towards room and board, other qualified expenses, and the remainder to tuition.
- Next, list the scholarship, subtract any remaining eligible expenses.
- The leftover amount is taxable scholarship income on the dependents return.
That said, the easiest way to enter the scholarship income for your daughter is to add the 1098-T to her return but change the numbers. Enter zero for tuition and for scholarship, enter the actual taxable amount calculated from the steps above.
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