Get your taxes done using TurboTax

I made a test with distribution code of '7' on the 1099-R (normal). and it also came up with penalty, I don't know why. No matter, we will work around it.

When you go through your CA state interview, you should eventually come to a screen like this:

As you can see, TurboTax in CA thinks this is an early distribution (Hmmn, I guess I should check the age of the taxpayer in my test). No matter. First of all, check that "My Distributions Are Not Subject to Additional Tax." That alone should be enough to remove that line 4 entry on the 3805P.

If it is not, then enter the amount as distributions not subject to additional tax, and put in an exception number. Use 99.

If anyone at the FTB wonders about this, just tell them the truth - you obviously did not make an early distribution, and you had to enter this to get around a tax software issue.