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.
