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When Box 2a (Taxable amount) is less than Box 1 (Gross distribution), it means a portion of the money you received is nontaxable. This usually happens because you already paid taxes on some of the money in that account (your "basis").

I think maybe the issue is that for box 20, code z, my K1 has W2 wages that are negative!  I don't know what that means as I am a passive investor in this business.  So technically the coop payments of "0" (which automatically appeared - I did not manually enter the "0") are greater than the W2 wages of "-976".  But if there aren't any coop payments from this business that I can see, I am not sure what other number I can put there as it is asking me to correct the "0."

To enter, edit or delete estimated taxes paid (Federal, State, Local) - Click on Federal Taxes (Personal using Home and Business) Click on Deductions and Credits Click on I'll choose what I work on (if shown) Scroll down to Estimates and Other Taxes Paid On Estimated Tax Payments, click on the start or update button   On Federal estimated taxes for 2025 (Form 1040-ES), click the start button   Federal estimated taxes paid are entered on Form 1040 Line 26

To enter your 1098 in TurboTax, select your product below and follow the instructions (FAQ:( TurboTax Online or Mobile Go to the 1098 screen under Deductions & Credits. Answer Yes to Did you pay any home loans in 2025? On the Let's get your 1098 form screen, enter the name of your lender to see if you can import your 1098. If you can't or don't want to import, select Change how I enter my form to upload, take a picture of, or manually enter your 1098. Continue through the screens until your 1098 is added. TurboTax Desktop Open or continue your return. Go to Federal Taxes. Go to Deductions & Credits and select I'll choose what I work on.  Under Your Home, select Start or Update next to Mortgage Interest, Points, Refinancing, and Interest. Answer Yes on the screen Did you pay any home loans in 2025? Continue through the screens until your 1098 is added.

Add the calculated credit amount to Line 78 (the "Total Payments" line).  You must write "IRC 1341" and the specific credit amount directly to the left of the total on that same line.   On Schedule CA (540), Part I, Section B, Line 16 (Column B), enter the amount of the federal deduction you took for the repayment. This essentially "adds back" the federal deduction so you can properly take the dollar-for-dollar credit on Form 540 instead.    NOTE: You will not be able to do this with TurboTax online (you may print the return for mail filing and write in the IRC 1341 notation).  If you are using the TurboTax Desktop you can make the entries in Forms mode, but you will have to print and mail the returns.  

I reviewed the tax return and discovered a box on Line 18 of Schedule A was checked possibly by mistake. 'If you elect to itemize deductions even though the are less than your standard deduction, check this box.'   I was not able to locate this question quickly so I decided to remove the deductions from your tax return. Real estate taxes and donations were removed, which immediately allowed the standard deduction to take precedence. I suggest you take the same action to clear the way for the standard deduction for your return.   @mblanco59