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Level 2
posted Apr 2, 2023 10:27:51 AM

California Tax Return: Where to enter capital gains from HSA in PC TurboTax

Hello, I have a question regarding where to enter long-term/short-term capital gains from my Fidelity HSA investment account in PC TurboTax for my California state tax return.  The PC version only shows "Interest earned from HSA", "Dividends earned from HSA", and "Net capital gain or loss from HSA" on the "Enter Your Health Savings Account Earnings". Can anyone help? Thanks!

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2 Best answers
Expert Alumni
Apr 3, 2023 12:07:20 PM

"long-term/short-term capital gains" - the long-term capital gains should be entered where TurboTax asks for the "Net capital gain or loss from HSA". Since short-term capital gains are taxed as ordinary income, you can add the short-term gains anywhere you have ordinary income. I would consider going to "Here's the income that California handles differently" and going to the bottom "Miscellaneous" to "Other Adjustments to Income". Add the short-terms gains as an addition to income - this will be added as ordinary income.

Expert Alumni
Apr 3, 2023 2:38:26 PM

I have to apologize - California taxes long-term capital gains the same as short term (see "California does not have a lower rate for capital gains. All capital gains are taxed as ordinary income.", so you would enter all capital gains in the same location in the CA interview.

 

Again, my apologies.

4 Replies
Expert Alumni
Apr 3, 2023 12:07:20 PM

"long-term/short-term capital gains" - the long-term capital gains should be entered where TurboTax asks for the "Net capital gain or loss from HSA". Since short-term capital gains are taxed as ordinary income, you can add the short-term gains anywhere you have ordinary income. I would consider going to "Here's the income that California handles differently" and going to the bottom "Miscellaneous" to "Other Adjustments to Income". Add the short-terms gains as an addition to income - this will be added as ordinary income.

Level 2
Apr 3, 2023 2:24:30 PM

Thanks. Much appreciated!

Expert Alumni
Apr 3, 2023 2:38:26 PM

I have to apologize - California taxes long-term capital gains the same as short term (see "California does not have a lower rate for capital gains. All capital gains are taxed as ordinary income.", so you would enter all capital gains in the same location in the CA interview.

 

Again, my apologies.

Level 2
Apr 3, 2023 3:17:52 PM

No problem at all. Thanks for your prompt update. This is great to know~