Thank you for providing this information. I tested this in both TurboTax online and TurboTax desktop software today (February 20, 2022). I found that the online version of the program it is calculating the additional 2.5% so long as you enter the amount of the earnings in the manner that you described. However, it is not doing this in the TurboTax desktop software.
If you're using TurboTax online, please check to see if you see the updated tax today. If you still do not see it, remove the California return and re-start it. TurboTax will reimport the data from your federal return and you will just need to answer the California-specific questions again.
If you are using TurboTax desktop, we will report this issue to the developers but for now, I did find a workaround.
- While in the California program, click on the "Forms" icon near the upper right of the program
- Click on "Open Form" on the left side of the screen
- Type in 3805P and click on "Form 3805P, TP: Retirement Plan Taxes" and then click Open Form
- Scroll down to Part II and enter the earnings on Line 5
- You can then return to the interview by clicking on Step-by-Step in the upper right hand of the screen
We will report the issue to developers for the desktop software, but using the above workaround you should be able to finish and file your tax returns without any issue.
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