Education Savings accounts and 1098T

In my return I entered the 1099-Q and 1098-T for my dependent.  I am getting a message saying that "based on the education expenses you've entered, the student beneficiary must report $383 of taxable income from this distribution".

How does my dependent do that?  Does it means that she also has to enter the 1099Q and 1098T in her return (she has minimal income, $1000)?  I funded the Education savings account and paid for all her expenses not covered by the Education Savings account, i.e. books, room and board, etc.

 

Appreciate your help, this issue has me confused.