Q.If we withdraw the scholarship money, would that then need to be reported on my child’s return and would the 529 withdrawal for this need to be in her name?
A. You have a choice. When, you want to withdraw money, you tell the plan administrator where the money goes. For 529 plans, there is an “owner” (usually the parent), and a “beneficiary” (usually the student dependent). The "recipient" of the distribution can be either the owner or the beneficiary depending on who the money was sent to. When the money goes directly from the Qualified Tuition Plan (QTP) to the school, the student is the "recipient". The distribution will be reported on IRS form 1099-Q.
The 1099-Q gets reported on the recipient's return. The recipient's name & SS# will be on the 1099-Q.