Q. Would we incur a penalty if we didn't add 1098T?
A. No.
The 1098-T is only an informational document. The numbers on it are not required to be entered onto your tax return. However receipt of a 1098-T frequently means you are either eligible for a tuition credit or possibly your student has taxable scholarship income (you've eliminated that possibility).
The American Opportunity Credit (AOC)is 100% of the first $2000 of tuition and other qualified expenses and 25% of the 2nd $2000. It is 40% refundable ($1000 max); you get it even if you don't have a tax lability to credit against. There is a four time limit of claiming the AOC and is only available to undergrad students.
More info:
https://www.irs.gov/Individuals/AOTC
