No, a qualified expense is for the classes and supplies but let's dig a little to be safe.
- The 529 goes to room and board off campus using the college guidelines along with education expenses. If all of the 529 money was spent on qualified expenses, it should not be entered. IRS Publication 970, Tax Benefits for Education states that nontaxable distributions should not be entered. A refund for a class, could affect the 529 if it wasn't all used for qualified expenses. It is best to claim the 529 used first, then the scholarship.
- The scholarship money also went towards education and room and board. The scholarship portion that went towards room and board - living expenses- is all taxable income. Refunding a portion of income already being taxed adds no value. The only concern would be if the student dropped a class and you are unaware. That would change the education expenses allowed to determine the remaining taxable portion.
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