@Paul90
I assume your daughter a half time or more student, since you say you qualify for the American Opportunity Credit (AOC). You are allowed to claim room and board for the pre paid plan distribution, even if she lives at home. You may claim your actual expenses or the school's R&B allowance/charges to on campus students, whichever is less. Either way, I'll assume that's more than $1659 (box 1 of the 1099-Q). Do not report the 1099-Q, at all, it's covered by room & board, on either your return or hers, even though she is the recipient.
Your daughter reports $2829 pf taxable scholarship on her return and you claim $2032 of qualified expenses for the AOC on your return.
On your return, show $0 in box 5, at the 1098-T screen and $2032 in box 1. On her return, show $0 in box 1 and $2829 in box 5; to simplify entry.
The 1098-T is only any informational document. The numbers on it are not required to be entered onto your tax return. If you claim the tuition credit, you do need to report that you got one. You claim the tuition credit, or report scholarship income, based on your own financial records. That sometimes means working around the 1098-T and the TurboTax interview.
To get back to the 1098-T screen, go through the entire education interview until you reach a screen titled "Your Education Expenses Summary". Click edit next to the student's name. That should take you to a screen “Here’s your Education Summary”. Click edit next to the section you want to change; tuition, in your case.
