1. No. Box 5 minus box 1 is only true if all of the scholarship went to tuition when it did not in your case. You were able to take the education credit so more of this was living expenses for your daughter. You need to look at your tax return and figure out how much of the tuition you claimed, probably $4,000 and add that amount to her unqualified expenses.
2. Yes to get the taxable income correct on hers.
3. There is no need for your expenses to go on her return. Simply indicate the portion that is taxable on hers.
4. Scholarships are reported by the school and entered when you receive the form 1098-T.
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