Moved from CA to IL mid-year. Paid off mortgage before the move, and got a new one after. Should I adjust interest deduction to include only the CA mortgage?

[erdo]

I sold my CA home, paid off my mortgage and moved to IL to a new house with a new mortgage in the beginning of August.  TurboTax also includes the interest deduction from the IL mortgage when preparing the CA return, which doesn't sound right to me.  Am I supposed to make an adjustment so that only the interest during the CA residency (from my home in CA) shows up on the CA return? If yes, which line do I use to make this adjustment on the "Misc Deductions" form?

[MarilynG]

Yes, you will make an adjustment to your Mortgage Interest, so that only California interest during residency is reported.

The Adjustments are on Schedule CA(540NR).

Here's a link to forms and instructions from the California FTB:

https://www.ftb.ca.gov/forms/2018/18_540nrbk.pdf

[erdo]

In CA returns, the software takes the total interest deduction from 1040 for the whole year (CA mortgage and IL mortgage), and prorates it based on the income I earned in CA.  I believe the only way to change this is to manually override the CA forms, is that correct?

[MarilynG]

A manual override on a form that efiles will cause an error, if you're not able to just correct the amounts. You may be able to 'override' on a worksheet that flows to a form; otherwise you could consider filing as calculated. If IL does the same type of proration, you end up with an allocation of your federal total mortgage interest for each state. If claiming Standard Deduction for CA, may not be an issue anyway.