Simple answer: Yes, don't enter the 1099-Q. It's fully covered by expenses.
You can enter the 1098-T, for the credit. To simplify the process, change the box 1 amount to $34 (3911 - 3877 = 34). That will get you a $34 American Opportunity Credit (AOC).
BUT
The AOC can only be claimed 4 times during a student's undergraduate years (Grad school doesn't qualify). It's worth a maximum of $2500 each year. You don't want to waste one of those times on $34. Just don't enter the 1098-T.
BUT
There are two other ways of getting that $2500, this year:
1. How much do you have in room & board, books and computers? Apply that to the 529 (1099-Q fund).
2. Pay some tax on the 529 distribution, so that you can use the entire $3911 (1098-T amount) to claim the AOC (you'll get $2488, assuming you have a tax liability of $1483 or more to offset).
I assume $3877 was the amount in box 1 of the 1099-Q. How much was in box 2? Box 2 is the maximum potential taxable amount. I also assume box 5 of the 1098-T was 0 or blank.
