Background: Using desktop installed TT Deluxe on Windows. Married filling jointly. Our "Dependent" daughter is a full-time first year college student and she must file her own 2022 taxes due to $5k of reported W2 income. We setup CA Scholarshare 529 for her as the beneficiary and withdrew funds to pay for last fall's expenses, distributed directly to her bank account. She has also received various scholarships. 1099-Q and 1098-T are both issued to her name.
My tax return: I entered her 1099-Q first in my tax return and then the 1098-T, including additional expenses such as room and board etc. The program informs me of the following verbiage:
"Looks like your 1099-Q is taxable. Based on the educational expenses you've entered, the student beneficiary must report $1K of taxable income from this distribution."
It appears that I perhaps miscalculated and withdrew a bit too much from the 529 plan.
Question-1: Where in TT and how do we enter this in my daughter's tax return? Do I remove the 1099-Q data from mine and renter it in hers, including other expenses? Doing so using the [exempt] approach appears that I almost recreate the 1098-T in her return which I doubt is the correct approach. I'd appreciate your detailed guidance. Or is there an alternative entry to report this $1K of taxable income?
Question-2: The amount of scholarship reported on the 1098-T is about $1,500 less than the actual that was applied toward her fall quarter. I contacted the school and they were not helpful - let's just leave it at that. How do I handle this? At this point I don't care about the small taxable loss, I just don't want to deal with getting flagged, especially not her return.
TIA.
