You do not need to report anything on your tax return, as long as you used 100% of the distributions from the 529 account to pay qualified education expenses for E. And yes, you should should keep the records of your expenditures for E's education. Any education expenses paid for with the 529 funds are not eligible for the education credits. If you paid all expenses that would otherwise be eligible for education credits, she cannot claim the credit. While E is not required to report the 1099-Q, she may need to enter information from the 1099-Q when reporting her 1098-T, otherwise the program might incorrectly calculate an Education Credit she is not eligible.
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