If my daughter started college in Fall of 2022 is it considered her first year of college as of Jan 1 2023?

Yes, that would her first year of college in 2023.

Basically, the answer doesn't matter. The question is there only there to steer the interview. 

The reason the TurboTax program asks if this was the student's first year as of January 1, 2023 is because if it was not, the program will ask if the American Opportunity Tax Credit (AOTC) had been taken in any prior year, and if so, how many times. 

If the answer is "Yes" this was the student's first year, the program knows that the AOTC has not been used yet. 

If you answer "No" the program will go on to ask if the AOTC or Hope Credit (which was from years ago) was used and how many times. This all has to do with the program making sure the credits are not used more than allowed. It would not cause an "error" to select "No" rather than "Yes', but you would be subject to those additional questions about previous usage of the credit.