@George4Tacks Thanks for your comments.

There is no federal income or deduction as it is Line 1 form 1099-SA distribution (distribution code 1-normal distribution) and such distribution is a qualified medical expense. Part 2 line 16 f8889 –taxable HSA distributions is zero.

However, PTO carried over such distribution to California schedule CA (540) part 2 line 4 as an addition under column C. This increases CA itemized deductions on Line 18 Form 540.

PTO seems not to have an input field to tell it not to carryover such distribution to CA as an additional CA deduction.

This is a single state return and this is the first time TP is reporting the distribution from HSA.

Please let me have your thoughts on this. Thanks.