I think the main issue was caused by turbotax adding box 16 in CA section on W-2 to box 16 in MA section on W-2 and used the result on MA form 1 line 3. The box 16 in MA section is same as box 1 of W-2 (so difference between MA and Federal wages on W-2).
To correct it, I need to ask turbotax to only use MA section for wages when working on MA return.
