If the distribution on Form 1099-Q doesn't exceed the amount of the student's qualifying expenses, then you don't have to report any of the distribution as income on your tax return. If the distribution exceeds these expenses, then you must report the earnings on the excess as "other income" on your tax return.
There's often confusion about who uses the 1099-Q for their tax return: the beneficiary student or the owner of the account (who may be a parent or other relative). The person who receives the funds from the paying institution and whose Social Security number is on the form has to report the 1099-Q on their tax return. This Investopedia article has more information.
Please also see this TurboTax tips article and this one for more information.
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