1. The 1099-Q being used for room and board is good. You don't need to report it. IRS Publication 970, Tax Benefits for Education states:
If the entire 1099-Q went to qualified expenses, room and board, tuition, etc then you do not need to enter the form. Tuition paid for the first 3 months of the next year also qualify, see page 12, What Expenses Qualify, and page 52 for qualified distributions.
2. Scholarship income is a hybrid income. It is used as income to determine if she needs to file a return. She does and will claim all of the income on her return where it counts as unearned income and she will file the Kiddie Tax.
3. You will still claim her.
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