@TaxPayer888
"Does this mean HSA interest, div, cap gains count towards the annual contribution Federal limit for this year? "
No. Any earnings in the HSA do NOT count as contributions, so don't worry about that.
@bill_sg
"Can you confirm that Earnings on amounts in HSAs are not taxable for California?"
This is not true...well, the bill was submitted, but it never passed. I looked into this a week or two ago and even called the hotline for Enrolled Agents at the CA FTB - California still taxes HSA earnings.
Here is my response from a week ago:
"I cannot comment on what other tax software firms do, but please know that the state of California still does not conform to federal law when it comes to HSAs. In English, this means that HSA contributions are not deductible from state income - which I confirmed with the California Franchise Tax Board a few minutes ago on their hotline for credentialed tax professionals.
You can see that there is no reference to HSAs or Health Savings Accounts in the current California booklet, as there would be if the law in California had actually changed.
I looked up AB 2348, and it was clear from the legislative history that it actually never passed. The same is true of a similar bill that was introduced this year - it hasn't passed yet, either.
So please feel confident that TurboTax is handling your return correctly."
@marychris
Your CPA is mistaken. Is he/she not from California? He/she can contact the CA FTB just as I did, and he/she will get the same answer: "California is not in conformance with federal law on the subject of HSAs".
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