"She is recipient of $8700 in 529 funds on 1099-Q.
"All 529 used for education expenses."
"I filed with the 1098-T on my own taxes."
She cannot use the same educational expenses, that you use to claim the education credit, to claim that the 529 distribution is not taxable. If there is an overlap, some of the 529 distribution will be taxable on her return. The taxable portion is considered unearned income, so the filing threshold is only $350.
This is usually not a concern, since room & board, as well as books and computers are considered qualifying expense for a 529 plan distribution. In addition, the American Opportunity Credit only uses $4000 of the tuition, in box 1 of the 1098-T.
