CA treats some Schedule A deductions differently from how they’re handled on the federal return. Federal amounts, and changes to the federal amounts for the CA return, are shown on CA Schedule CA Part II.

Adjustments to federal deductions can be entered manually when TaxSlayer doesn’t handle them automatically. To manually adjust deductions, go to [State Section > Itemized Deductions].

    • This page lists some adjustments to specific lines on CA Schedule CA Part II.
    • The nonspecific “Other Adjustments to California Itemized Deductions” option at the bottom of the page is for adoption-related expenses, which is out-of-scope.

Note: Bracketed numbers, below, are the [2023] line numbers for Part II of CA Schedule CA.

  • [Part II, Line 4] Medical expenses in excess of 7.5% of federal AGI
    • Warning: Qualifying expenses for HSA distributions include items (such as OTC drugs) that are not qualifying for Schedule A. These are not qualifying for the CA itemized deduction. 
    • Manual adjustment to CA itemized deductions may be needed if the taxpayer had HSA-reimbursed medical expenses that otherwise would have been federally deductible AND the amount of those expenses would have increased the federal medical deduction on federal Schedule A line 4.

The actual entry is tricky, and should not be done until the federal Schedule A is complete.

      • (1) Determine the amount of HSA-reimbursed expenses that otherwise would have been deductible. Remember that not all HSA qualified expenses are deductible medical expenses, so the amount may be less than the amount in Form 1099-SA box 1.
      • (2) In TaxSlayer, go to State Section > Itemized Deductions > Additions - Tax-free HSA distribution for qualified medical expenses, enter the qualified expenses paid that exceed 7.5% of federal AGI:
        • If federal Schedule A line 4 is greater than 0, then enter the amount from step 1.
        • If line 4 equals 0, then calculate the CA deduction:
          1. Add the amount from Step 1 to the number on Schedule A line 1, then
          2. subtract the amount on Schedule A line 3.
          3. If the result is a positive number, enter it as the CA additional deduction.
          4. If it's negative, then there’s no additional CA deduction; no entry should be made.
  • [5a] State and local taxes –see page 75
    • New federal limit for TY2025: see section Schedule A – Total State and Local Taxes, page 79.
    • CA doesn’t allow state income tax or sales tax as itemized deductions, regardless of amount. 
    • CA doesn’t conform to the federal SALT limit, though our clients rarely exceed that. 
      • If the taxpayer is itemizing on the CA return, enter all real estate and personal property taxes on the federal Schedule A.
    • TaxSlayer automatically flows real estate and personal property taxes to CA Schedule CA Part II, lines 5b and 5c, while eliminating the state income tax or sales tax amount.
  • [6] Foreign income taxes when taken as a Schedule A deduction rather than a credit (see section Schedule A – Other Taxes, page 79)
    • The CA adjustment must be entered as a manual subtraction (note that line 6 on the federal Schedule A is for all other taxes, not just foreign tax; subtract only foreign tax).
      • Note: Foreign taxes only go on Schedule A – and require a CA adjustment - if they exceed $300 per taxpayer.
  • [8] Home mortgage interest and points
    • CA doesn’t conform. Interest paid is still deductible on the CA return, up to $1 million in loans ($500,000 MFS), to the extent these loans were used to buy, build, or improve a home. 
      • Any interest difference (on loan amounts over $750,000 up to $1 million) must be added manually.
    • CA doesn’t conform to the elimination of interest and points on “home equity debt” (debt secured by a home, but not used to buy, build, or improve that home).
      • The amount of such interest and points must be added manually: enter amount in the box “Additions – Home mortgage interest and points reported to you on Form 1098”
    • Calculating what is acquisition debt (buy, build, or improve) versus non-acquisition debt (home equity debt) is complicated; see section Schedule A - Interest and Points Reported on Form 1098, page 79 for details.
  • [11-2] Gifts to Charity
    • Educator expenses for which a federal deduction was claimed on Schedule 1 Line 11 (see page 67) may be claimed as CA charitable contributions if (a) they are not for professional development, (b) the educational institution is a registered charity with the IRS, and (c) all usual documentation requirements are met for taking a charitable deduction, either Schedule A Line 11 or 12, as appropriate (page 81).  Educator expenses that do not meet all three of these conditions may be deducted as Expenses subject to a 2%-of-AGI reduction, lines 19-21 below.
  • [16] Gambling losses to offset lottery winnings in California – see page 62
    • Manually subtract the CA adjustment in the “Other Miscellaneous Itemized Deductions” section.
  • [16] Repayment of unemployment benefits for a prior year – see page 61
    • The CA adjustment must be entered as a manual subtraction; in TaxSlayer, this goes in the “Other Miscellaneous Itemized Deductions” section.
  • [19-21] Expenses that were subject to a 2%-of-AGI reduction.
    • This entire category of itemized expenses, such as safe deposit box or tax preparation fees, is no longer federally deductible on federal Schedule A. However, California conforms to federal Schedule A deductions as of 2015, so such expenses are still allowed as CA itemized deductions subject to a 2%-of-federal-AGI reduction.
    • Most of the “2%-of-AGI reduction” expenses for the CA return were entered on Schedule A on the federal return. TaxSlayer handles such “no longer valid for federal, but possibly valid for states” deductions by continuing to allow them to be entered in the federal Schedule A section. See page 83.
      • These expenses flow automatically from the federal Schedule A to Part II of CA Schedule CA.
    • There are two “2%-of-AGI reduction” expenses allowed on the CA return but not included in the federal Schedule A. Both must be added manually in Part II of CA Schedule CA.
      • Educator expenses for which a federal deduction was claimed on Schedule 1 Line 11 (see page 67). (This is the deduction of up to $300.)
        • TaxSlayer automatically adjusts to increase CA income, as mentioned above, but doesn’t adjust itemized deductions. Educator expenses are claimable as work expenses, but may be more profitably claimed as charitable donations if all conditions are met (see Lines 11-2 above).
      • Work-related expenses for which a federal education credit was claimed
        • TaxSlayer doesn’t know if expenses for either of the two education credits (see page 90) were work-related. If they were, then they are deductible using CA Schedule CA, either a subtraction of income (offsetting any Schedule C net income, which is preferred), or as an additional itemized deduction, a manual subtraction, as “Other Miscellaneous Itemized Deduction”.

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