1. Excess contributions - did you make any contributions? I can understand the state asking about claiming contributions for a state credit.
For the federal and education credit, if a class was dropped that had been paid for by the QTP, it would need to be returned to the fund - otherwise, it could become taxable income.
The fact that you are entering the Q tells me some portion is taxable. The program is trying to figure out the portion.
2. Does your Q not have the basis listed?
Maybe a screen shot of the issue would help us or a little more information on where you are in the program.
It is really a shame that the whole Q can't go towards 529 for Room and Board and Qualified Education Expenses - Internal Revenue Service. Then, it isn't entered and you don't have to try and figure out the taxable portion.
IRS Publication 970, Tax Benefits for Education states:
If the entire 1099-Q went to qualified expenses, room and board, tuition, etc then you do not need to enter the form. Tuition paid for the first 3 months of the next year also qualify, see page 12, What Expenses Qualify, and page 52 for qualified distributions.
Page 45 repeats: Don't report tax-free distributions (including qualifying rollovers) on your tax return.
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