The reason for the error is that your interest expense deduction is limited by the IRS when the outstanding balance of your mortgage exceeds $750,000 for mortgages taken on or after December 16, 2017. The state of California allows the debt to reach $1,000,000 as long as you have $100,000 in equity before limiting the interest deduction.
If you receive the error, you should be able to proceed through your state return and TurboTax Online automatically adjusts to include the additional interest deduction on your state return.
It is important to report your Form 1098 accurately on your tax return to ease the filing process with both the IRS and the state of California.
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