Box 1 of the 1098-T shows what qualified education expenses were paid. It has nothing to do with where the money came from that paid those expenses.
Box 5 of the 1098-T shows 3rd party funds received by the school on the student's behalf. That would be things like scholarships and grants. Since 529 funds are paid directly to the beneficiary recipient of those funds, box 5 of the 1098-T does not include what is reported on the 1099-Q. So there is no conflict.
" If my kid then includes the same tuition on 1098T again, it's it double dipping? "
Yes, it most absolutely is double-dipping. You can't do that, as you know.
