[Edited 4/19/23 | 9:16 am PST]
The 1099-Q info would go on the return of the person whose social security number is on the form (see this other Community discussion). And since you’re claiming your daughter as a dependent, you would be the one who gets an education credit (on your return), if there is going to be one.
So if it’s your daughter on the 1099, things are complicated slightly by the allocation that must take place across the two tax returns. The main concept is that any dollar of “qualifying expenses” (i.e. tuition and fees) can be used for only one tax benefit: to exclude a dollar of the 529 distribution from taxation or to get a credit (but never both—that’s called “double-dipping,” and can lead to headaches). Of course, you’d probably like to use it on the one that gives you the best result on your return (or the best net result on both returns).
The good news is you’re actually allowed to do this. After first reducing the 529 distribution by “Room & Board” (which fortunately is a “qualifying expense” for that purpose), you can then allocate as much as you want of the remaining amount to something other than tuition, increasing the tax on the return where it’s being reported. But doing this then gives you more tuition to use for an education credit which is actually larger than that additional tax (sometimes much larger, especially when the 529 tax is on the kid’s return, in a low bracket).
Here is the IRS telling us about this treatment, to make you more comfortable with it. (With a 529 distribution that goes directly to the school, some people worry that it’s cheating if they treat it like they paid that tuition, but it’s not!) Note that this is more applicable to undergraduates (as the American Opportunity Credit is the best one, and only available to them).
@janice78, I hope this was clear. If you’re unsure about anything as you make the entries, be sure to come back here with questions! The IRS likes to check on education stuff, but hopefully the Community can help you feel confident about both of the returns...
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