rbynaker
Level 13

We normally have a handful of CA preparers hanging around.  I'll take a stab at this one (and they can correct me if I'm wrong).  There are two components that you need to look at here.

CA NR taxes you on all of your income as if you were a resident and then applies a ratio to reduce the tax to arrive at CA tax amount.

CA does NOT conform to federal treatment of HSA contributions.  So even the spouse's gross income would include the HSA contribution under CA law (presumably this is a W-2 box 12 code W amount).

IMO, the HSA income is properly included in CA AGI.  It should be included in the CA Sch CA (which I call "kaka") column C to arrive at column D "Total amounts using CA law" but NOT included in column E.  If the software is including it in column E then you need to search and destroy.  If it's just included in column C, that's correct.

Rick

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