Enter the 1098-T on your return and claim the Tuition credit. This uses up $4000 of tuition.
$11,379 of tuition minus $4000 (used for Credit) minus $4246 (covered by scholarship) = $3133 can be applied to the 1099-Q.
$3133 (tuition) + $6183*(R&B) + 83 (books) =9,399 Adjusted qualified expense for the 1099-Q. Since this is less than box 1 of the 1099-Q, none of the 529 distribution is taxable. Don't enter the 1099-Q on either your return or the student's.
Since none of your student's 1099-Q or scholarship is taxable, the $3193 on W-2s is her only income, she is not required to file a federal tax return. Since there is no federal income tax to be refunded (box 2 of the W-2), she should not file a federal tax return.
*For others reading this, room &board, while living at home could also have been added. But, it wasn't needed in this case.
