It is somewhat complicated.
It is always best to have the distributions sent directly to the school or issued to the student.
If the student is your dependent, I suggest you enter both 1099-Q's and the 1098-T into your TurboTax program so that your TurboTax can do the calculations.
Your program will tell you what the student needs to claim(if anything) and also try to get you an education credit.
IF THE STUDENT IS NOT YOUR DEPENDENT, he would use the 1098-T and report his 1099-Q, HOWEVER he would also need to adjust the amounts on the forms to suit your situation. For example, if your distribution was entirely used for room and board, great, you needn't enter the 1099-Q since it won't be taxable income, and you needn't adjust the 1098-T since room and board expense is not listed on a 1098-T. If you took a 2,500 distribution to pay tuition, Box 1 on the 1098-T would need to be lowered by 2,500 if you want your distribution to be tax-free.
Sometimes the program will suggest the student claim some of the scholarships and/or distribution so that you can get an education credit if it thinks the tax the student pays will be less than your credit. This decision is based on an assumption since your TurboTax does not communicate with his TurboTax.
Sometimes the program will suggest you take the American Opportunity Tax Credit. That credit can only be taken four times per student. School usually spans over five calendar years, so it might be better to save a credit for the last year rather than take it the first year.
The IRS DOES get a copy of Forms 1099-Q and 1098-T, but they are not like many other forms where there is a specific place on your tax return to list them. These forms serve two purposes, to calculate an education credit and/or generate taxable income. With these forms, the Taxpayer has some choices as to what they want to accomplish (credit, taxable income, neither) so it is very difficult to give advise without knowing the circumstances.
As I said, I suggest you read Pub 970 or let TurboTax make the choices for you when you click "Maximize My Tax Break" after entering the forms.
IRS Pub 970
@erica28
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