Hello!

It has been determined that it is beneficial for me to take advantage of the Lifetime Learning Credit as opposed to the CHET benefit  (Because I am in a low tax bracket, it's a 20% LLC credit vs a 12% tax rate)

Q:  Since I took advantage of the the Lifetime Learning credit instead of the CHET advantage, I'm guessing the distributions from the CHET are included as taxable income on the federal return.   So do you agree I would need to put the gross distribution amount from my 1099-Q box 1 ($9363.99) as the "Amount of CHET Distributions" on the Turbotax screen?

Thanks for any assistance

I got this response from an "expert" level person

Yes, if you claimed the credit making the CHET taxable, you must include that amount as federally taxable.

CHET features state and federal tax free earnings and withdrawals on qualified higher education expenses. Connecticut families can take an income tax deduction (up to $5,000 for single filers, $10,000 for joint filers) on contributions to CHET accounts.

I responded

Does it make sense to you that by entering this number in, it would make the CT Return go from a $641 refund to a $915 refund?  I was expecting it to go down.

They responded

 Yes, because even though it was taxable for the federal return, you get an adjustment on the state return because the state gives it beneficial tax treatment.

Hmmmmm. thoughts?

Thanks for taking the time to help