The 1099 Q needs to be entered on Michael's tax return. You need to enter education expenses to offset the 1099 Q but you do not enter the 1098 T because the child is not a dependent on Michael's tax return. See the steps below.
Steps to report the 1099 Q if it benefits a non-dependent:
Select Federal Taxes
Select Deductions and Credits
Select Show More at Education
Select Start or Revisit at ESA and 529 qualified tuition programs (Form 1099-Q)
Indicate that the payment was for "A beneficiary that's not a dependent on this return" - see screenshot below.
You will be prompted to enter the beneficiary name. Then, you will be directed to a screen where you can enter the beneficiary's education expenses. See screenshot below.
