Unfortunately, even tough it was computing correctly by deducing Federal vs state values correctly, it was getting blocked at the smart check step and not allowing to proceed to file tax return with the error which I have reported. The only thing that helped was manually deduct (interest applicable for 750k) the extra interest value reported in 1098 (calculated for 760k) from box 1 and reducing loan amount to 750k.
So basically 2 values were adjusted from box 1 and box 2.
box 1 - 12,380.05 became (12,380.05 - 78) 12,302.05. 78 is what TT computed and adjusted for CA state calculation as CA state the limit is 1M instead of 750K
box 2 - 760k became 750k
TT needs to fix this issue for CA state filing. As people are losing refund money because of this.
