Does my 18 year old dependent daughter need to file a return if she did not work, but received a 1099-Q?

[AllyZ123]

Parent claimed her 1099-T.

[Carl]

Assuming the student's SSN appears on the 1099-Q in the REcipient's TIN box , if the 1099-Q funds were used 100% for education then no.

If only some of the 1099-Q funds were used for education and the remaining amount plus any other income from other sources is less than $12,950, then no.

If the amount of investment income (such as interest) is less than $1100, then no.

[AllyZ123]

Thank you!

[KrisD15]

It depends what the distribution was used for. 

If it paid her college Room and Board, (or other education expenses that you did not use for an education credit) no. 

If it did not pay qualifying expenses, and is therefore taxable, yes. 

@AllyZ123

[AllyZ123]

It paid for her tuition and books.  I claimed her1098-T since she is my dependent.  Is that ok?

[KrisD15]

Did you claim the tuition on the 1098-T and was that the SAME tuition that the distribution was used for? 

If yes, how much was the distribution? 

Did she also get scholarships in Box 5? If yes, how much? 

[AllyZ123]

I did claim the 1098-T.  The 1099-Q distribution was $3,220 and that was used for tuition and books.

No scholarships.  

[KrisD15]

You can't "double dip" and use the same expenses for a credit and then also allocated to a distribution. 

It might, or might not matter. 

Box 1 of a 1098-T reports Tuition. Box 5 reports Scholarships. 

Subtract Box 5 from Box 1, what is the "remaining expense"?

NOW subtract the distribution from this "remaining expense", what is left? 

If you are getting the American Opportunity Tax Credit, that credit "Maxes Out"  with 4,000 expense. 

If you are still left with 4,000 expenses after subtracting scholarships and distributions from Tuition, you get the full American Opportunity Tax Credit and the student needn't claim any of the distribution. 

If the expenses are LESS THAN 4,000, remember to add books, supplies and in your case up to  3,220 Room and Board Expense since a distribution can USUALLY be used to pay Room and Board. 

The main issue is that an expense cannot be used for a credit and also to offset tax-free assistance, such as a scholarship, or distribution. 

IRS PUB 970 does a good job explaining-

Pub 970