Q. 1: Just to double check, since I can't claim my son as a dependent, I cannot include the 1098T on my taxes, correct?
A.1: Correct.
Q2:Including the 1098T on his taxes gives him a $1,051 refund. Is this correct or am I missing something? Getting a refund larger than the amount withheld seems odd.
A2: That is correct. The American Opportunity Credit (AOC) is 40% "refundable", meaning you get even if you do not have a calculated tax liability. What he doesn't get is the other 60% of the AOC ($1500).
If he had gone to school full time, or earned less than $5050, so he could be your dependent, you woulda got the full $2500 (depending on your income).
