529 Questions

Question...my mother-in-law opened a 529 many years ago for my daughter to use towards tuition. She is a freshman this yead and we used a portion of the 529 to pay for her tuition. My mother-in-law had the 529 funds transferred into her bank account and paid the tuition out of her bank account. We (my husband and I) also paid for a smaller portion out of pocket. We claim her as a dependent. When I received the 1098-T, my MIL thought that we should give it to her since she paid a portion of the tuition with the 529. I don't agree with that since she is our dependent and am looking for clarification. 

We also have a 529 for her but have not had to use it yet. 

 

Thanks for any feedback!