On my Turbo Tax CA filing, I am a non-resident of CA and live in NV. I am a full-time realtor with an investment property in CA that I have owned for several years. I had a loss on the property but Turbo Tax is reflecting HSA income but this income was for NV. Also I had a loss on the rental property, which still should be a loss but Turbo Tax added as positive income and unemployment for my spouse and I was calculated, even though this was received by the state of Nevada and not CA. Why is this reflected this way?
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Non-residents of California are taxed only on California sourced income. Your investment property is that CA sourced income.
However, your HSA contributions don't appear to be associated with that income.
Nonresident California residents often find that TurboTax adds back all the HSA contributions, even ones made in another state.
There is no good way for TurboTax to know in which state the contributions were made in, so the taxpayer needs to manually adjust the California state income to remove the HSA contributions that were added back while the taxpayer was not in California.
***To make the CA adjustment***
Go to State Returns, and navigate to your California return.
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.
Scroll down to Miscellaneous Adjustments on this screen. Click Start for Other Adjustments to Income.
Enter in the left column "adjustment for out-of-state HSA contributions". Enter in the middle column (i.e., a subtraction) the dollar amount of HSA contributions made out-of-state. This will be subtracted from your California state income.
Make a note on your copy of your state tax return (because, of course, you are going to save a copy, right?) that you made this adjustment because TurboTax added back all the HSA contributions (even ones made while a non-resident), and you needed to counteract this. This is in case you ever get a letter from the state asking about this adjustment.
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