For CA, unlike for the IRS, I have to report HSA income. My HSA has 2 positions: cash and a mutual fund. The cash portion earns interest which I would report (except it's less than a $1). The mutual fund has 3 types of income: dividends, long term gains and short term gain. All of these are reinvested back into the mutual fund. The gains are not "realized", as all of my HSA activity (contributions and distributions) have been in the cash portion. Does CA consider all of re-invested income taxable, or just the dividends?
My Fidelity statement says all income is tax-free, but I believe that is true for the IRS.
krm57
