Retirement tax questions

I don't want to cause you more confusion, but I do want to clarify some of the information you received.  

The 1099-Q must be reported on the return of the social security number on the 1099-Q.   You indicated that the 1099-Q is in your name so I assume it is in your social security number.   Only you can claim the 1099-Q, however, you do not have to report the 1099-Q.   

As for the 1098T, if you are claiming your son on your taxes, then you can claim the 1098-T.  Your son cannot claim the education credit if you are claiming him on your return. 

To report the 1098-T and the 1099-Q correct, the amount in Box 1 of the 1098-T is the payments received for qualified tuition and related expenses.   Box 5 are scholarships and grants received by the student.  The scholarship amount in Box 5 is subtracted from the amount in Box 1,   The is the amount of tuition/expenses that the 529 Plan funds would be applied.  When TurboTax is apply the 529 Plan funds it is only looking at the tuition/expenses.   Room and board, transportation, and meals are not used in calculating the Adjusted Qualified Higher Education Expenses applied when compared to the distribution from the 529 Plans funds.   

Funds distributed from a 529 Plan, will be reported by the bank on a Form 1099-Q.   The 1099-Q is sent to the owner/recipient of the 529 Plan funds.   The Form 1099-Q is to be reported as income if they were not used to pay qualified college tuition/expenses.    If the amount reported on the 1099-Q were used to cover qualified college tuition/expenses you do not need to report the income.  If the amount exceeds the amount of college tuition/ expenses then the excess needs to be reported as other income on your 1040.   

After applying the 529 Plan funds there is still a balance of tuition/expenses, then this amount is used to determine the amount of education credit.   On the other hand, if the amount of scholarships in Box 5 and the 529 Plan Funds exceed the total qualified tuition/expenses in Box 1, then this amount is reported as income on the return.

Reporting 529 Plan

You won't need to report the 1099-Q if the amount of Box 1 of the 1098-T is more than the amount in Box5 and the balance remaining is equal to or more than the amount of the 1099-Q you do not need to report the 1099-Q but keep the documentation with your tax papers.   However, if this is the case you cannot claim the education credit.    In order to claim the education credit your Box 1 amount after deducting scholarships/ grants and taking into consideration the amount of 1099-Q, there is no excess tuition remaining, you cannot claim the 1099-Q.

Alternatively; you can just not report the 1099-Q, at all, if your student-beneficiary has sufficient educational expenses, including room & board (even if he lives at home) to cover the distribution. You would still have to do the math to see if there were enough expenses left over for you to claim the tuition credit. Again, you cannot double dip!  When the box 1 amount on form 1099-Q is fully covered by expenses, TurboTax will enter nothing about the 1099-Q on the actual tax forms. But, it will prepare a 1099-Q worksheet for your records, in case of an IRS inquiry.  On form 1099-Q, instructions to the recipient reads: "Nontaxable distributions from CESAs and QTPs are not required to be reported on your income tax return. You must determine the taxability of any distribution." 

In summary, add up all of the qualifying education expenses.   You cannot use room and board and other expenses for the education credit.  It is the tuition only.   You want to see if there are enough expenses for room and board along with books and other required supplies, that are equal to or exceed the amount of your 529 distribution shown on the 1099-Q.   If this is the case, then you do not have to report the 1099-Q.   In this case, you would enter the 1098-T on your return and see if you qualify for the education credit.  This eligibility will depend on your MAGI and the amount of tuition paid.   Note:   If Box 5 is more than Box 1, you will not receive a credit and may end up with an entry of other income in the amount of the difference which is taxable.