If the 1099-Q is entered in the same TurboTax program as the Taxpayer that is getting the American Opportunity Tax Credit, the software will know and not compute the penalty interest.
Regardless if the 1099-Q was issued to you or your daughter, you enter the 1099-Q into your TurboTax program so that the software can do the math. (The program will ask who was issued the 1099-Q and you have the option of choosing your dependent listed on your return.)
If any of the distributions are taxable, YOUR program will tell you what to report as "other income" on your daughter's tax return.
You do not need to enter the 1099-Q a second time (on your daughter's return) just the taxable income amount.
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