HSA Contributions in California State Tax module

[kurochan]

I entered my W-2 information under Federal Tax, including employer HSA contributions (Box 12, code W). Then, when I proceeded to California State Taxes, under "Here's the income that California handles differently", I saw the same amount of my HSA contributions in two different lines: "Income Taxes Exempted by US Tax Treaties" and "Health Savings Account (HSA) Contributions". The latter looks correct. However, HSA contributions have nothing to do with "Income Taxes Exempted by US Tax Treaties", and I don't have such other income exempted by tax treaties under Federal Taxes. I included a snipping of such a screen. Is this a software bug? Could you advise how I can fix it?

[LindaS5247]

Check your W-2 entries carefully and make sure nothing was input incorrectly.  Try removing and ‌re-entering your W-2(s).

To remove a W-2 in TurboTax Online or Desktop:

1. Open or continue your return.
2. From the menu, select Search and type-in W-2.
3. Select the Jump to link in the search results.
4. On the Your W-2 info so far screen, select Edit next to the W-2 you want to change.
5. Select the trash can Delete icon to delete the W-2.

Sign in and continue your return:

1. Select the magnifying glass, search for W-2 and select the Jump to link.
2. Select Work on my W-2 and Continue. If you've already entered a W-2 or need to add another one, select Add another W-2.
3. Enter your Employer Identification Number (EIN) from Box b on your W-2.

[kurochan]

Thank you. As you suggested, I deleted W-2 and re-entered it. However, I still saw the two lines that I referred to earlier on the California State Tax screen. I then clicked on the Edit button for Income Taxes Exempted by U.S. Tax Treaties, and clicked No on the screen below. Afterward, I still saw Income Taxes Exempted by U.S. Tax Treaties in the original California screen. I have not finished all tax return work, but do you think if this will show up (perhaps erroneously) in the line of Income Exempted by U.S. Tax Treaties on Schedule CA?

[kurochan]

One of the two screens did not get uploaded correctly. So, I am reposting it.

[MonikaK1]

The screen in the California return that displays Income Exempted by U.S. Treaties and Health Savings Account Contributions is there specifically to allow you to make any needed changes to your California income for items that are treated differently in California than they are on the Federal return.

Click the Learn More links next to each item, then click the Edit box next to each item and answer the questions. It appears that TurboTax found something on your W-2 or in your answers in the Federal W-2 interview that could have indicated that "income subject to treaties" could be an issue that should be addressed.

California law has no provisions comparable to the federal HSA provisions. As a result, a taxpayer must reverse the federal treatment of deductions, interest, and contributions related to their HSA on their California income tax return. See this Franchise Tax Board document for more information. Several bills have been introduced in the state legislature in an attempt to change the law.

[lisa5]

I am having the exact same issue. The amount of my HSA contributions is showing up in both places under "Here's the income that California handles differently", 'Income Exempted by U.S. Tax Treaties' and 'Health Savings Account (HSA) Contributions'. I am unable to remove the dollar amount from the tax treaties part by either checking "NO' or by deleting the numbers. I think there is a problem with turbotax because I owe CA state taxes this year, but got a refund last year  - all income and deductions were relatively the same for both years. The W-2 is entered correctly.

[BillM223]

@lisa5 

Could you do us the favor of sending us a sanitized version of your tax return? By "sanitized" I mean that TurboTax will scrub all personally identifiable information from your return (it really does - I have seen many sanitized returns and have no idea who they belonged to). The "token" is a number that points to the sanitized version of your return in our data base, so I can see what your return is doing.

Online

• Log into your TurboTax Online tax return
• On the left, click on Tax Tools
• Under Tax Tools, click on Tools
• In Tools Center, click on Share my File with Agent
• TurboTax will give you a “token”, a 7-digit number
• Post the token number in this thread
• Be sure to add to that post “@” “billm223” (without the space in between) so that I will be notified

Desktop

• Open your return in the desktop product
• Look along the top and click on Online
• Click on Send Tax File to Agent
• TurboTax will give you a “token”, a 7-digit number
• Post the token number in this thread
• Be sure to add to that post “@” “billm223” (without the space in between) so that I will be notified

[kurochan]

@BillM223 

Here is the token to my sanitized return: 1176232

[BillM223]

Thank You for your quick response...

[lisa5]

Hello,

I am unable to find the "online" tab.

Thank you

[lisa5]

Hello,

I just sent it. 

1177243 is the token.

[BillM223]

Another user with the same issue reported this afternoon that after TurboTax updates, this problem went away. Please see this thread.

How about (1) Updating your desktop software (if you are using that - otherwise, the Online software is updated automatically), and (2), going through the federal and state interviews one more time (don't need to change anything) and try to e-file again.   

Let us know if that works.

@lisa5 

[lisa5]

@BillM223

I just sent it. 

1177243 is the token.

Thanks!

[BillM223]

"I just sent it. " - you mean you were able to e-file it?

[BillM223]

There have been a number of updates to the California program, and this event (of "Income Taxes Exempted by US Tax Treaties" appearing with the HSA number) no longer occurs in the sample return that you send with the token.

Can you confirm that?

@kurochan