ERROR with CA charging additional tax on interest from Return of Roth IRA contributions before deadline

[jackkgan]

Request your confirmation on entries below, why the error is coming up and how to fix it.  Thank you.

Context:

I had contributed $7k to Fidelity Roth IRA in Jan 2024 but realized that there is income limit as my salary increased to > $150k in March 2024. It had earned interest of $801.85.

I submitted Return of Excess contributions to Fidelity and got back $7,801.85.

I was New York resident for all of 2024, though I lived in CA until end of 2023. So I downloaded both New York and CA for TurboTax and am filling both sections. I entered 1099-R for Federal section which then had below:

"Did you use your IRA to pay for any of these expenses?" screen: "Corrective distributions made before the due date of the return": $802

Question:

California section has below. Please confirm if I should leave it as is, should I check the box that "My distributions are not subject to additional tax?" I understand if I owe the tax on the interest of $802.

Should I change that to below?

If I don't do that, I get additional taxes and errors below

ERROR

When I switch to Forms, it shows below in form 3805P. This should have been Yes, right? Please let me know what I missing. Thankyou.