1) post the 1099-T on to YOUR tax return. Since Box 1 exceeds Box 5 by $7565, you should get the AOC credit of $2500 since there is more than $4,000 available from the 1098-T. Did that occur?
2) you have $3,565 left that is not "consumed" ($7565 - $4000)
3) Since the administrator sent $7590 from the 529 plan, it covers the remaining $3565 of the uncovered expenses, leaving $4,025 of the 529 plan ($7590 - $3565) distribution looking for something to cover.
4) How much was room and board and the non-required books? as long as that exceeds $4025, then there is no need for your daughter to post the 1099-Q onto her tax return at all! Just make note of the math (as I have described above) and put it away as documentation in the oft chance the IRS asks (quite unlikely)
