Sorry, a couple of typos. I've corrected them above.
Q. Since my husband is the recipient of the 1099-Q, do we need to report that amount on our tax return?
A. No, if it's fully covered by expenses. But if it does need to be entered, it goes on your return, not the student's .
Q. And we should not enter the 1098-T on our tax return?
A. Yes, for two reasons. You do NOT qualify for the tuition credit and you do not have to enter the tuition expense, because you are not entering the 1099-Q (you already know it's not taxable, and don't need TurboTax doing the complicated calculation).
Q. In reading this (cited website comment), it sounds like we should NOT claim our son as a dependent...and if so, can he qualify for any education credits? And how does all this affect my original question?
A. That post is mostly just wrong. Note that he's talking about the child tax credit, which doesn't even apply to college age dependents (more than 16 y.o.).
Technically there is a provision that allows your student-dependent to claim a federal tuition credit But, from a practical matter it seldom works out. A student, under age 24, is only eligible for the refundable portion of the American Opportunity Credit (AOTC) if he/she supports himself by working. She cannot be supporting herself on student loans & grants and 529 plans and parental support.
If the student actually has a tax liability, there is a provision to allow him to claim a non-refundable tuition credit. But then the parent must forgo claiming the student as a dependent, and the $500 other dependent credit. The student must still indicate that he can be claimed as a dependent, on his return.
