First of all, the purpose of a 529 plan is to pay education expenses for the student who should also be the Beneficiary.
Distributions for education should ALWAYS be made in the name of the student. Direct transfers to the school will be reported in the name of the student as well. This way the 1099-Q is issued to the student, as it should be.
If the owner takes a distribution for something other than education expenses, that 1099-Q will be issued to the owner.
Most owners of a 529 Plan do not follow this procedure. Parents make the distribution and pay the education expenses, or in your case, use some funds for education and some funds for something else.
When the student is a dependent, the person claiming the student should enter the 1099-Q, 1098-T and all other information regarding education expenses of the student into their (parent's) TurboTax program so that the TurboTax program can do the math.
If there is tax due on the distribution, that tax will assessed on the Taxpayer who was issued the 1099-Q.
If the tax is due to the student, the parent's TurboTax program will say how much the student needs to report.
In your case, since the 1099-Q was issued to the owner, the owner (parent) would be liable for the tax.
Keep in mind that if there are expenses to cover the distribution, the program may take those expenses and put them against the 1099-Q OR use them for a credit. When you click "Maximize My Tax Break" the program will figure the best allocation.
You can type letme into the search-box to change the credit if you are eligible for more than one.
Tax is only on the Earnings portion of the distribution.
IRS Pub 970 is fairly easy to read (for an IRS publication) and has a lot of great information and tips. It might be worth you looking it over.
IRS PUB 970
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