The California Itemized Deductions section allows taxpayers to adjust itemized deductions that were carried over from the federal return. California does not conform to all federal itemized deduction rules, so additions and subtractions may be required before calculating the allowable California itemized deduction amount. California itemized deductions are generally computed using Schedule CA (540), Part II.
The program automatically transfers federal Schedule A amounts and calculates certain California adjustments when applicable. Taxpayers should only enter amounts in this section when a California-specific adjustment is required.
Important: Whenever a 'Federal Schedule A Amount' is displayed in a yellow banner, the taxpayer has a corresponding deduction reported on the federal return. Review the amount to determine whether California law requires an adjustment. The displayed amount is carried from Federal Schedule A and is provided as a reference when calculating California additions or subtractions.
When to Use This Section
Use this screen when the taxpayer:
- Itemized deductions on their federal return.
- Has California-specific differences from federal Schedule A.
- Needs to increase or decrease an itemized deduction to comply with California law.
Medical Expenses
Additions - Tax-Free HSA Distribution for Qualified Medical Expenses
California may require an adjustment when qualified medical expenses were paid using tax-free Health Savings Account (HSA) distributions and the federal deduction differs from the amount allowable for California purposes.
Enter the portion of qualified medical expenses paid with tax-free HSA distributions that exceeds 7.5% of federal AGI, when required.
Federal Schedule A Amount
Displays the medical expenses transferred from Federal Schedule A.
If this field is displayed, review the amount to determine whether California treatment differs from the federal deduction and whether an adjustment is necessary.
Taxes You Paid
State and Local Taxes
California does not allow a deduction for state and local income taxes. The program automatically removes state and local taxes deducted on Federal Schedule A.
Enter Additional State and Local Taxes That Are Not Deductible on CA Itemized Deductions
Enter an amount only if the federal deduction includes additional state or local taxes that were not automatically removed and are not deductible for California purposes.
Examples may include:
- State income taxes paid with an extension or return.
- Additional state or local income taxes not included in the automatic adjustment.
Note: The total adjustment cannot exceed the Federal Schedule A amount displayed.
Subtractions - Other Taxes
Enter an amount if a tax was deducted on the federal return but receives different treatment under California law.
Interest You Paid
Additions - Home Mortgage Interest and Points Reported to You on Form 1098
Enter an adjustment if mortgage interest or points were deducted federally but are not fully deductible for California purposes.
Examples may include:
- Debt that does not qualify as acquisition indebtedness under California rules.
- Interest related to debt exceeding California limitations.
Additions - Home Mortgage Interest and Points NOT Reported to You on Form 1098
Enter an adjustment when mortgage interest was deducted federally but California allows a different amount than was claimed on the federal return.
Additions - Points NOT Reported on Form 1098
Enter an adjustment when points deducted federally receive different treatment under California law.
Gifts to Charity
The program automatically calculates common California charitable contribution adjustments. Most taxpayers will not need to enter amounts in this section.
Enter amounts only when the charitable contribution deduction allowable for California differs from the amount calculated on the federal return.
Additional Subtractions - Gifts by Cash or Check
Enter an amount if California allows an additional charitable contribution deduction that was not included in the federal calculation.
Common situations:
- The taxpayer has a California charitable contribution carryover from a prior year that is larger than the federal carryover.
- A prior-year California adjustment resulted in additional charitable contributions being available as a California deduction.
- A contribution carryover was used differently on prior California returns than on prior federal returns.
Additional Additions - Gifts by Cash or Check
Enter an amount if the charitable contribution deduction claimed on the federal return exceeds the amount allowable for California.
Common situations:
- The taxpayer's California charitable contribution carryover is smaller than the federal carryover.
- A prior-year California adjustment reduced the amount available to deduct in the current year.
- Contributions deducted federally include amounts that were previously adjusted on a California return and cannot be deducted again.
Additional Subtractions - Other Than by Cash or Check
Enter an amount if California allows an additional deduction related to donated property that was not included in the federal calculation.
Common situations:
- The taxpayer has a California carryover from a prior year related to donated property.
- Prior California adjustments resulted in a larger California carryover than the federal carryover.
Additions - Other Than by Cash or Check
Enter an amount if the deduction for donated property claimed on the federal return is greater than the amount allowable for California.
Common situations:
- The California carryover related to donated property is smaller than the federal carryover.
- Prior California adjustments reduced the amount available to deduct for donated property.
Subtractions - Carryover From Prior Year
Enter a charitable contribution carryover from a prior year when the allowable California carryover is greater than the federal carryover amount used on the return.
Example: The taxpayer carried forward $2,000 for federal purposes but has $3,000 available to carry forward for California due to prior California adjustments.
Additions - Carryover From Prior Year
Enter an amount when the charitable contribution carryover deducted on the federal return exceeds the amount allowable for California.
Example: The taxpayer deducted a $5,000 federal carryover, but only $3,500 remains available for California because prior California returns used a larger portion of the carryover.
Casualty and Theft Losses
The program automatically calculates common casualty and theft loss adjustments. Most taxpayers will not need to enter amounts in this section.
Enter amounts only when the casualty or theft loss allowable for California differs from the amount claimed on the federal return.
Additional Subtractions - Casualty and Theft Losses
Enter an amount if California allows an additional casualty or theft loss deduction that was not included in the federal calculation.
Common situations:
- A federally declared disaster loss was allowable for California but not deducted on the federal return.
- The taxpayer has a California disaster loss carryover from a prior year that is greater than the federal carryover.
Additional Additions - Casualty and Theft Losses
Enter an amount if the casualty or theft loss deducted on the federal return exceeds the amount allowable for California.
Common situations:
- The federal return includes a casualty loss related to an event that does not qualify for a California deduction.
- The taxpayer's California disaster loss carryover is smaller than the federal carryover.
- A prior California return reduced the available loss carryover, resulting in a smaller allowable California deduction.
Other Miscellaneous Itemized Deductions
The program automatically transfers miscellaneous itemized deductions from the federal return. Most taxpayers will not need to make entries in this section.
Use these fields only when a deduction allowable for California differs from the amount claimed on the federal return.
Subtractions - Other Miscellaneous Itemized Deductions
Enter an amount if California allows an additional deduction that was not included in the federal calculation.
Common situations:
- A deduction was disallowed or limited on the federal return but remains allowable for California.
- A prior-year California adjustment created a deduction carryover that is not reflected on the federal return.
- A California-specific deduction is permitted that was not included in the federal itemized deductions calculation.
Additions - Other Miscellaneous Itemized Deductions
Enter an amount if a miscellaneous deduction claimed on the federal return is not deductible or is deductible in a smaller amount for California.
Common situations:
- The federal return includes a deduction that California does not allow.
- The deduction was calculated differently for California because of prior-year California adjustments.
- The taxpayer claimed a deduction federally that exceeds the amount allowable under California law.
Other Adjustments to California Itemized Deductions
Use this section only when a California itemized deduction adjustment is required and no other field on the Itemized Deductions screen specifically applies.
Description of Other Adjustment to California Itemized Deductions
Enter a brief description explaining the reason for the adjustment.
Examples:
- Prior-year California carryover adjustment.
- California-specific deduction adjustment.
- Federal and California deduction calculation difference.
Adjustments to California Itemized Deductions
Enter the amount of the adjustment.
Common situations:
- The taxpayer received guidance from the California Franchise Tax Board requiring an adjustment that is not captured elsewhere on the return.
- A prior-year California adjustment affects the current year's allowable itemized deductions.
- A California deduction carryover differs from the federal carryover and no specific field exists for the adjustment.
- A federal itemized deduction was adjusted on a prior California return and requires a corresponding California adjustment in the current year.