It looks like you've done a perfect job of matching total expenses to sources of funds. You can claim the American Opportunity Credit (AOC) and none of the scholarship and none of the 529 distribution is taxable. Save yourself the effort and potential frustration and just don't enter the the 1099-Q* or 1098-T** on the student's return.
Yes, you can ignore the "refund".
I can't help you with boxes 4 and 6 of the 1098-T. Depending on the details, an amended 2022 return may be required, but probably not.
*You can just not report the 1099-Q, at all, if your student-beneficiary has sufficient educational expenses, including room & board (even if he lives at home) to cover the distribution. When the box 1 amount on form 1099-Q is fully covered by expenses, TurboTax will enter nothing about the 1099-Q on the actual tax forms. But, it will prepare a 1099-Q worksheet for your records. You have done the math to see if there were enough expenses left over for you to claim the tuition credit and keep scholarships tax free.
References:
- On form 1099-Q, instructions to the recipient reads: "Nontaxable distributions from CESAs and QTPs are not required to be reported on your income tax return. You must determine the taxability of any distribution."
- IRS Pub 970 states: “Generally, distributions are tax free if they aren't more than the beneficiary's AQEE for the year. Don't report tax-free distributions (including qualifying rollovers) on your tax return”.
**The 1099-Q and the 1098-T are only informational documents. The numbers on them are not required to be entered onto your (or your student's) tax return. In your case, the student is neither claiming anything or reporting anything.
