I assume your daughter is the beneficiary of the 529 account. I further assume the 1099-Q is in your name and SS# (you are the recipient).
The 1098-T is only an informational document and doesn't go on anyone's return. So the question is who gets the educational expenses. Answer: you both do but you cannot double dip.
Total qualified expenses
(including room & board) less amounts paid by scholarship less amounts used
to claim the Tuition credit equals the amount you can use to claim the earnings
exclusion on the 1099-Q.
Example:
$10,000 in educational
expenses(including room & board*)
-$3000 paid by tax free scholarship
-$4000
used to claim the American Opportunity
credit ( on the student's return in this case)
=$3000 Can be used against the 1099-Q ( on the parent-recipient's return)
Box
1
of the 1099-Q is $5000
Box
2
is $600
3000/5000=60% of the
earnings are tax free
60%x600= $360
You have $240 of taxable
income (600-360)
*you may claim room & board even if she lives off campus. Use the school's charge rate for on campus students unless you know her actual cost is less.
