only adjustment I'd suggest to your response is that the 1099Q, since it has her daughter social security number on it (because the payment went directly to the school GOES ON HER TAX RETURN AND NOT YOURS. in this case that is a moot point because the expenses exceed the 1099Q box 1. Do not put the 1099Q on anyone's tax return (it doesn't get sent to the IRS in any event).
the way it works is that the 1099Q has the student's social security number on it if the payment goes directly to the school. Presumably they are all payments to cover off expenses on a school statement and the IRS knows where the money went.
but if the 529 money goes to the parents, the IRS doesn't really know what happened to the money, creating all these hoops to get the same end. In this case the parents social security number is on the form and they are required to file it (assuming Box 1 exceeds the available expense)
