it is confusing.......and you can't 'double dip'
1) the 1098-T needs to go on YOUR return as along as a) the student is a dependent and b) Box 1 EXCEEDS Box 5 (otherwise the 1098-T goes on the student return).
2) then, the 1099-Q goes on the tax return of whomever's SS# is on the form. That will be the parent if they received the 529 money. It will be the student if the student or the college received the money directly from the 529 plan (sounds like YOU are the 'recipient' the way you described the situation). did you receive the money directly from the 529 plan?
3) assuming the 1099-Q goes on your tax return, be sure you post other school expenses (room and board being the biggest) when asked by TT. failure to post these other expenses that are not reflected in the 1098-T MAY BE the reason you are being taxed on some of the 1099-Q earnings (box 2)
4) and this is where it gets really confusing (if you are not confused already!), if you get the AOC credit or the lifetime earning credit, some of the college expenses were consumed to provide this credit which leaves fewer expenses available to cover the 1099-Q distribution, so it's a form of 'double dip' otherwise. (You can't use some of the expenses to get the credit and then turn around and use the same expenses to reduce the income tax liability on the Box 2 earnings on the 1099-Q). You are better off with the AOC credit or Lifetime earning credit, ,than you are paying taxes on the BOX 2 earnings on the 1099-Q form, so I wouldn't fret it.
5) on another thread I walked through an example of how this all works.
https://ttlc.intuit.com/community/college-education/discussion/re-handling-various-529-distributions...
if you can post back with some actual figures that are on the 1098-T, 1099-Q and the expenses like Room and Board, we may be able to get you through this. Remember, it's only the Box 2 earnings on the 1099-Q that create potential taxable income for you- nothing else.
