If the distribution paid unreimbursed education expenses, don't report the distribution as taxable income. If you do not qualify for an education credit, do not report the 1098-T as long as your daughter did not get more tax-free assistance (scholarships) than what was paid as expenses in 2017. Keep a copy of the 1098-T, the distribution from the 529, as well as her school statement with both your tax files. Claim her exemption and move on.
The expenses and credits can be manipulated a bit, so the reporting can get complicated at times.
