You can report the 1098-T on your return and claim an education credit if eligible.
If box 5 is less than box 1, then you do not need to report this on her return if every bit of it was used to cover her tuition, then none of it is considered taxable income to her.
If it is increasing her tax liability, please double check your answers so that you are not saying that it was used to pay for room and board. If it WAS used to paid for room and board, then this would become taxable income and would increase her tax liability.
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