Delete the 1099-Q. It does not get entered on either the parent or the student's tax return*. The student does not need to prepare or file a tax return. The student is not eligible to claim the AOC on his return.
You have more than enough expenses to fully cover the 1099-Q (529 plan distribution) and have enough tuition left over to claim the American Opportunity Credit (AOC).
Enter the 1098-T on your return, to claim the AOC.
*The 1099-Q does not go on your return because you were not the "recipient" of the funds or the 1099-Q. The 1099-Q does not go on the student's return because we know none of it is taxable. On form 1099-Q, instructions to the recipient reads: "Nontaxable distributions from CESAs and QTPs are not required to be reported on your income tax return. You must determine the taxability of any distribution."
When the box 1 amount on form 1099-Q is fully covered by expenses, TurboTax will enter nothing about the 1099-Q on the actual tax forms.
