As noted above, CA does not permit the deduction of HSA contributions. In the simple case (i.e., you are a full-year resident of California), TurboTax handles this correctly by adding the HSA contributions back to federal income to make state income (the W16 amount is the same thing, however, this number is not used anywhere on the state return - instead, TurboTax starts with the federal income and then adds and subtracts things to get the state income).
However, if you are filing a part-year CA return, TurboTax can't know when you were living where, much less the dates on which you made your contributions. Therefore, you need to make some manual adjustments to arrive at the correct state income.
First, the HSA contribution that is with code W on your W-2 and any other employer contribution that was not part of the code W amount will appear on the screen "Here's the income that California handles differently" early in the CA interview. This amount appears (unless you change it in the CA interview) on form CA (540NR) on line 1h, column C.
If you made any contributions directly to the HSA custodian (not through your employer), this amount appears on the same form, line 13, column A.
All three of these amounts will end up on the 540NR line 16 to be added back to CA taxable income.
If the W-2 with the code W amount are all CA source wages, then we don't need to adjust the code W amount - it will be added back to CA income as it should be .
If you made any personal (i.e., direct) HSA contributions, take a look at form CA (540NR), line 1h, column C, and see if your direct HSA contribution is there (it should be).
You said, "Check This Entry: CA 540NR Other income must be entered". I assume it actually said, "Check This Entry: CA 540NR Other earned income must be entered"
First you need to determine how much of an HSA addback you have for California (that is, how much you have to add back to CA income of your HSA deduction from federal income). For example, if you had 10,000 in HSA contributions made through your employer (code W amount in box 12 of your W-2) for the year and you spent exactly 50% of your time in CA, then the add back would be 50% of the 10,000, or 5,000. Thus, Column E would be 5,000.
If this doesn't make sense, come back and tell us:
1. how much your code W amount was on your W-2.
2. How much time you spent in California as opposed to the other state.
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