Q. Never put it (LLC) on hers?
A. She wasn't allowed to do that in the past, because she was your dependent.
Q What are the stipulations for her?
A . Is a student at an eligible institution. Not a dependent. Has qualified expenses.
Q. The 1098-T will show tuition of 14.5k...the 1099-Q will show the same amount. SOMEHOW SHE MIGHT GET IT?
A. Room & board* (even if living at home), books and other course materials, including a required computer are qualified expenses for a 529 distribution. You allocate those expenses to the 1099-Q, which frees up tuition for her to claim the LLC.
You could also consider paying tax on some the 529 earnings, to free up more tuition for her credit. You'd have to do the math to see if that's worthwhile. At $30,000 income, she looking at $1700 tax. She would need to use $8500 of the tuition to wipe that out. You only pay tax on a percentage of the earnings shown in box 2 of the 1099-Q. A rough guess is about 25% of the box 2 amount will be taxable to you.
*For room and board to be a qualified 529 expense, the student must be half time or more. You may count the lower of your actual expenses or the school's "allowance for cost of attendance" for students living at home.
