After you file

Thank you. I will post here when I've reviewed the file.

I have reviewed the diagnostic file.

The Instructions for Form 3853 state "If your applicable household income or gross income is less than your filing threshold, you can check the box in Part II, Coverage Exemption Claimed on Your Tax Return for Your Household. Other exemptions may be claimed in Part III. Depending on your situation, you may need to complete one or more parts of this form."

The filing threshold is applicable if either your gross income or your adjusted gross income exceeds the table amount. This is what the excerpt is intending to say. I have found that explanation in other tax publications, but unfortunately, the Franchise Tax Board instructions aren't that clear.

On Page 3 of these Instructions, a table appears that explains each exemption. The income exemption is shown as follows:

Income below the filing threshold — Your applicable household income or gross income was less than your applicable minimum threshold for filing a tax return.

Because your taxable income was above the filing threshold,  your return shows tax on that income. The tax was eliminated with credits claimed on the return. Then, your payments were credited, and the Individual Shared Responsibility Penalty was added, which reduced your refund.

If a user's income is below the California AGI threshold, TurboTax automatically uses the income below the filing threshold exemption and the penalty is not applied.

You do have the option of claiming the Affordability exemption if it applies. Go back to the California interview and review the choices on the screen, "Did you have a situation that waives the tax penalty for being uninsured?" under "Couldn't afford insurance". If you can choose one of those alternatives, and then on the next screen choose the months to which it applies, TurboTax will recalculate the penalty. 

 [Edited 04/03/24| 10:33am PST]

@potatopots