Bottom line: There are plenty of expenses to cover the 1099-Q. Just don't enter the 1099-Q, at all.
"Room & board paid. If student lives off campus, what is school's R&B on campus charge. If he lives at home, the school’s R&B “allowance for cost of attendance” for student living with parents. She is married with children an lives at her home. School is part time, so I don't imagine there is an allowance."
Yes, there is an allowance, because she is half time, and it's almost certain to be more than $2993. Room and board are the expenses that you are technically allocating to the 1099-Q, for it to be tax free.
Are the parents trying to claim the tuition credit (are they eligible, income under $180K filing jointly, $90K single)? Parents are not a factor.
Then she and her husband are eligible for the very generous tuition credit ($2193 to $2500), if their income is under $180,000. As mentioned early, you need to communicate with her. She may be assuming you are claiming the 1098-T, to make the 1099-Q tax free. That's not the case, she can claim the credit, based on the 1098-T plus any books and other course materials, including a required computer.
