Yes, your daughter, as the student, would claim any taxable income on her return.
No, you don't change any of the boxes on the 1098-T.
No, if the student is simply going to claim the excess scholarship (Box 5 less Box 1) Form 1098-T does not need to be entered.
Form 1098-T is entered into the program so that the program can make a calculation to try to get an education credit for the taxpayer that claims the student.
The numbers on the 1098-T can be misleading if tuition is paid in one year, but the scholarship crosses and posts the next calendar year.
With just the numbers you list, 10,292 tuition and 13,700 scholarship, the student would be responsible for claiming 3,408 as taxable income. (It doesn't matter what was paid with what funds in the year, you can allocate as you like for the best tax break)
If there were books and supplies purchased, those expenses would also count but not be listed on the 1098-T.
If the student claims MORE of the scholarship as taxable income, that could free up expenses meaning you could be eligible for a credit.
You can enter the 1098-T and go through the interview if you would like to try to get a credit even if it means your daughter might need to claim additional income. Sometimes the tax on the income is less than the credit.
If not, simply enter the taxable income on the student's return.
IRS Pub 970 has some great tips and is fairly easy to read.
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