One way is to have your daughter enter the 1099-Q on her return and limit the amount used for qualified expenses to $675 so the rest is included in income. Her income is low enough, there won't be a tax.
Another way,
- go to the federal income section
- scroll to the bottom
- Miscellaneous Income, 1099-A, 1099-C, Start
- Scroll to the bottom
- Other reportable income, Start
- Other taxable income?
- Select YES
- Description taxable scholarship
- Amount, enter your amount, $3869
- continue
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