I did a little more research on this. Again, I'm generally not familiar with California.
That said, it appears that TurboTax (TT) is doing it correctly. You ARE subject to the Kiddie Tax on the CA return. Yes, it's form 8615 that triggers it. Line 5 says "Enter the smaller of line 3 or line 4. If zero (and it is 0 in your case), stop; do not complete the rest of this form but do attach it to the child’s return."
The difference is that on the federal form 8615, your federal standard deduction makes your taxable income $0 and nothing is subject to the kiddie tax. Because the CA standard deduction is less than your total income, you technically have taxable income. There is usually no tax, on a normal form 540 because the first $10,756 is not taxed. But in the case of CA form 3800, you will get taxed. It's basically a California "Gotcha"
And you are required to file a CA return at $5540 income.
References:
https://www.ftb.ca.gov/forms/2023/2023-3800-instructions.html
https://www.ftb.ca.gov/forms/2022/2022-3800.pdf
