It depends. If your dependent child’s only source of income was investment income and it was less than $1,150 (in interest, dividends, and capital gains), they are not required to file a tax return. Form 1099-Q only needs to be reported on the tax return of the person whose SSN is on the form if the withdrawal is more than the tuition paid in Box 1 of the 1098-T plus other adjusted qualified educational expenses. In that case, the earnings on the excess distribution would be taxable income. To find out what are qualified educational expenses, please review the Guide to Tax Form 1098-T: Tuition Statement.
Please review the TurboTax article Guide to IRS Form 1099-Q: Payments from Qualified Education Programs for further details.
You can report the 1098-T on your tax return if your daughter qualifies as your dependent. You may also qualify for the Lifetime Learning Credit or the American Opportunity Tax Credit if it is not for the same expenses that the 529 Plan was used for. For example, If the 529 Plan withdrawal was $5,000 and the tuition and qualified educational expenses are $10,000, you can claim a $1,000 lifetime learning credit on $5,000 of expenses, and the qualified expenses on your 529 plan will be reduced by $5,000.
Please see the TurboTax articles Guide to Tax Form 1098-T: Tuition Statement and What Are Education Tax Credits? For additional information.
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