topic Deducting mortgage interest from state (CA) but not Fed in Get your taxes done using TurboTax

Deducting mortgage interest from state (CA) but not Fed

bc63 — Tue, 10 Mar 2026 07:27:06 GMT

We just received a "Notice of Proposed Assessment" from the state of California for our 2018 taxes. In that letter, they stated "You may not add adjustments to your California Schedule CA for itemized deductions because you have already included them on your Federal Schedule A."

Here is the situation:

Back in tax year 2018, we received two 1098 forms for home mortgage interest, one for a line of credit (secured by a 2nd home) and one for our primary residence. I most likely entered both directly into TT in the normal form entry process.

On our Fed Sch A, TT put the smaller of the two (line of credit interest) into line 8a "Home mortgage interest" but did not include the larger amount (~17k). I now have no idea why TT did this and I didn't catch it nor question it at the time. In any case, we only ended up with about 15k total on our Sch A so we filed using the standard deduction of 24k (married filing jointly).

Then on to the state filing, specifically Schedule CA (adjustments), under Part II, TT put the smaller amount into column A ("Federal amounts") and then the 17k into column C ("Additions"). This 17k therefore was deducted from our overall income, but only for state taxes.

Now 4 years later, we received this Notice of Proposed Assessment and I'm trying to decide what to do. It seems like their statement of "you can't deduct this again because you already did on your Fed taxes" is incorrect, but we're not sure. Any help or knowledge about this process would be greatly appreciated!

Re: Deducting mortgage interest from state (CA) but not Fed

Anonymous_ — Wed, 07 Dec 2022 15:20:11 GMT

See https://ttlc.intuit.com/turbotax-support/en-us/help-article/tax-audit/turbotax-audit-support/L6AcMoNFD_US_en_US?uid=lbdsqyru

Re: Deducting mortgage interest from state (CA) but not Fed

bc63 — Wed, 07 Dec 2022 17:30:17 GMT

Thanks, I've already opened a case with TT/Intuit and they are in the midst of analyzing what the software did.

What I'm more interested in is whether our taxes were done correctly or not. Is the state correct in stating that we cannot deduct home mortgage interest from our gross earnings, even though we did not deduct that amount from our federal return?

Re: Deducting mortgage interest from state (CA) but not Fed

bc63 — Thu, 08 Dec 2022 16:38:10 GMT

Does anyone care to comment on this? I know that there were probably too many details in my original post to wade through, but the essential question is this:

Can we deduct home mortgage interest from our gross income for the state if we did not deduct that same amount from Fed?

Thank you....

Re: Deducting mortgage interest from state (CA) but not Fed

bc63 — Fri, 09 Dec 2022 14:40:28 GMT

BTW, Intuit's response to this is that they no longer support their product from tax year 2018, nor will they respond to any questions or issues from that year. The state only issued this Notice of Proposed Assessment within the last week, so there wasn't much we could do about the timing.

This is obviously disappointing as I've continued to purchase their product each year and now they leave me hanging out to dry.