I was able to do that prior to posting my question. Despite inputting Aug 3, 2020 has the date I refinanced and paid off my 2016 mortgage (which qualified as mortgage acquisition debt) with a $760K mortgage, TurboTax treats both loans as having been outstanding together from August through December 2020. This is apparent when reviewing Part I of California's 'Deductible Home Mortgage Interest Worksheet.' My understanding of the tax law is that if one refi'd a mortgage that, itself, was originated in 2016 (sub $1M) with a mortgage in 2020 at an equal or lower amount on the payoff date ($760K) in 2020, then despite the Federal interest deduction being subject to limitation, one could deduct the full interest paid per the 2, 1098's on one's California return, which is a state that does not observe the mortgage interest limitation, particularly when both loans qualify as mortgage acquisition debt and the subsequent one fully repaid the older one. However, in the Federal section, Turbotax does not correctly calculate line 18 of the Home Mortgage interest Deduction Worksheet, and hence this error is carried over to the CA 540 return. I have not been able to find a way to jump to the CA 540 mortgage interest deduction worksheet to correct the time each mortgage was outstanding for 2020, which seems to be the root of the issue. TurboTax makes it appear that both mortgages were outstanding from August through December.
