Review all of the California schedules with your return to ensure that the information was input correctly. Your state income tax as calculated on your California Form 540 is based on your Federal Adjusted Gross Income, plus California additions (items taxed by California but not Federal) less California Subtractions (items taxed by Federal but not California). Therefore, just comparing your state withholding and taxable wages on your W-2 with your total California tax won't show you how much you need to withhold for California or whether your return is correct.
The way you answer the interview questions in TurboTax can also affect how your state tax is calculated. For example, if you entered in TurboTax that your California wages qualified to be treated as Paid Family Leave, they would be subtracted from your California income subject to tax.
Review your California Schedule CA to see any items of income were added or subtracted in calculating California income. This should help resolve your question as to whether the tax is correct.
You can prepare estimates for California for 2025 within TurboTax Online:
- Go to Other Tax Situations in the California State return
- Click on Start or Revisit next to Estimated Taxes for Next Year
Contact your payroll office to make any needed changes to your California Form DE-4 for California state withholding. If you are already claiming zero withholding allowances, you can add an additional dollar amount to be deducted from each paycheck on line 2 of the form. You can use the TurboTax estimate, or divide your expected shortfall by the number of pay periods in a year to get the additional amount to deduct from each paycheck for 2025.
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