lifetime learning credit and 529

[valeriefields1]

I did enter the $154 as a negative.  8z on Federal Schedule 1 is zero

[Hal_Al]

That means none of the CHET distribution  is taxable (and that's correct, actually my TT leaves line 8z blank).  So, for CT, you do not make any entry at that screen. If TT insists that you do, enter 0. 

[valeriefields1]

so this statement is not true?  Wish i understood.  but I'll go ahead and leave it at zero.  Thanks so much for your help

[Hal_Al]

I'm not sure what you mean by so "this statement" is not true?

If you mean this:

ENTER EDUCATION TRUST DISTRIBUTIONS

Include the amount of any distributions from the Connecticut Higher Education Trust Fund (CHET) that were included as taxable income on your federal return

TT is probably presenting that screen simply because a 1099-Q was entered or because it detects that a calculation was done, even if it resulted in $0 taxable income. 

[valeriefields1]

No, sorry, I should have been more specific... I meant the statement I made:

"I thought that the whole $9364  would be taxable because I was not using the money to pay for tuition any more because the lifetime learning credit would be more beneficial."

[Hal_Al]

No, the box 1 amount of the 1099-Q is never the taxable amount.  It's only the box 2 amount (earnings) that is potentially taxable.

Note box 3 (basis). This is the amount of money you originally put into the fund.  It was "after tax" money. You were already taxed on that money, way back when you earned it. You don't get taxed on it again, just for taking it out of the fund.  The purpose of the QTP/529 plan is to allow parents to save for college on a tax free basis (the interest, dividends and capital gains, earned in the fund, are not taxed). You (or the beneficiary) do get taxed on the earnings, if the money was not used for education. 

You did not get a federal deduction when you put money into the CHET / QTP, like you do for an IRA.  Some states  do allow a deduction, for contributions (CT is one). Some of those states require a recapture of the deduction, if the money is later not used for education (apparently CT is NOT one of those). You have no entry to make on your CT return. 

[valeriefields1]

Ohhhh, I see.  Rookie mistake.  I'm ready to submit this one and move on. 

Thanks one more time!