The American Opportunity Tax Credit maxes out using 4,000 in education expenses resulting in a 2500 credit.
You say you got that credit so I am assuming you entered the 1098-T in your TurboTax program.
The scholarship and distribution are not taxable because the expenses you listed are far more than the distribution, scholarship and the 4,000 for the American Opportunity Tax Credit. If fact, the distribution could be used for room and board, but it doesn't matter, you got the full credit and there is no additional income that the student needs to claim (besides her wages and interest income).
Any excess education expenses (471.52) are not deductible. Nothing more would be reported.
Pub 970
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