Page 2 of pub 970:"What's New for 2020 Emergency Financial Aid Grants under the CARES Act. Emergency financial aid grants under the CARES Act for unexpected expenses, unmet financial need, or expenses related to the disruption of campus operations on account of the COVID-19 pandemic, are not includible in your gross income. Because the grant is not includible in your gross income, you cannot claim any deduction or credit for expenses paid with the grant including the tuition and fees deduction, the American opportunity credit, or the lifetime learning credit. See FAQs: Higher Education Emergency Relief Fund and Emergency Financial Aid Grants under the CARES Act."
As to your 529 distribution; you cannot count it as a tax free distribution if the expenses were already covered by the emergency government funds. But, you're free to match the expenses and funds as you see fit, e,g, say the government money went to room and board and the 529 money went to tuition.
Note: some users have reported that their school included the relief money in box 5 of the 1098-T, as scholarship, complicating the answer.
