@kimo20 Your daughter does not need to enter the 1099-Q on her tax return if you know the distribution was made for qualifying education expenses, which includes room and board expenses in the case of the 1099-Q distribution. The problem is that she can't use the education expenses that you used for your education credit to also exempt the education plan distribution from taxes.
If you have an American Opportunity Credit, the first $2,000 represents $2,000 worth of qualifying expenses. The rest represents 25% of your expenses, up to $2,000. So, if you had a credit of $2,500, you would have used up $4,000 worth of education expenses. The rest would be available to exclude your 1099-Q distribution from taxation.
If you have a lifetime learning credit, it is 20% of your education expenses, up to $10,000 of expenses.
So, you can do a manual calculation to see if any of your 1099-Q is taxable, and if not just exclude the entry on your daughter's tax return.
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