If you moved to Ohio from CA, then made the HSA contribution (only in OH), no, it is not taxable in California. However, by default, the entire HSA contribution is added back to California income as if you lived their all year.
As you see, TurboTax adds the entire amount of the HSA contributions to California income, because it doesn't know what percentage would be appropriate. You will need to manually adjust the California income for a part-year resident to indicate the appropriate amount of HSA contributions to be allocated to California.
To recap: the federal tax return permits contributions to an HSA to be deduction from federal income tax (up to a limit). However, California does not permit this deduction. Therefore, California, by default, adds the total amount of the HSA contribution back to the federal income, on the assumption that you were a California resident all year.
However, for part-year residents and non-residents, a manual adjustment needs to be done.
Go to State Returns, and navigate to your California return.
As you proceed through the interview, you will be asked under General Info questions concerning your residency. Indicate when you arrived (or departed) California, or the number of days you lived in California (the questions vary).
Make sure you do this before the Income section.
In Income and adjustments, proceed through the interview. You may see a screen announcing that HSA contributions are treated differently in California. Just hit Continue.
You will notice on the main page ("Here's the income that California handles differently"), the first line item is (likely to be) "Health Savings Account (HSA) Contributions". Here TurboTax notes that the amount of your HSA contribution has been added back to the California return.
NOTE, despite the Edit button, you can't change this here.
Instead, click on "Done with Adjustments". The next screen will be "Nonresident Adjustments".
Next, the program will ask you a series of questions over several screens about your California based W-2 income, your other California income, and your California business income (if any). For California based income, enter the actual amount of wages paid to you while in California. On the W-2, this is probably the value in box 16 for California.
If you did not make any HSA contributions while you were in California, you would enter “zero” for “other California income”. If you were contributing to the HSA while in California, then you would compute a ratio of income in California to income overall, and multiple that times your total HSA contributions, to determine how much to add back to California as "other California income".
Now your California state income will be correct. Obviously, as you progress through these screens, you have to enter your real California source income or else the state return will be wrong. What you are doing is overriding the TurboTax computation of adding all the HSA contributions back to California.
