• 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, in the State Section, select “Itemized Deductions.”
    • The Itemized Deductions page lists some adjustments that post to specific lines on CA Schedule CA Part II. For example, because CA still allows interest on non-acquisition debt secured by a home to be deducted (up to $100,000 of debt), you might need to enter an amount in the “Additions - Home mortgage interest and points reported to you on Form 1098” box.
    • There is also a non-specific “Other Adjustments to California Itemized Deductions” option at the bottom of the page; this 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.
    • Medical expenses reimbursed by an HSA account, on line 15 of Form 8889, are not deductible on federal Schedule A, but possibly can be added to line 4 of Part II of CA Schedule CA. A manual addition is required.
    • The actual entry is tricky, and should not be done until Schedule A on the federal return is complete. 
    • 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. 
    • What is entered in TaxSlayer depends on how close the taxpayer is to the 7.5% threshold. Three examples follow. For all of them, assume a Federal AGI of $40,000, so that the 7.5% threshold is $3,000, that the HSA distribution was $1000, and that $900 qualified for Schedule A (but was not entered there; it was used for HSA purposes on the federal return).
      • (1) Schedule A (federal) medical expenses are $3,500, which is $500 over the threshold. Enter $900 in TaxSlayer.
      • (2) Schedule A (federal) medical expenses are $2,000. Do not enter anything in TaxSlayer. (If you enter $900, TaxSlayer thinks that this is the amount in excess of $3,000, and it counts the $900 as part of CA itemized deductions.
      • (3) Schedule A (federal) medical expenses are $2,500. Enter $400 in TaxSlayer. (Total allowable medical expenses on the CA return are $2,500 plus $900 equals $3,400; that’s $400 over the threshold.)
  • [5a] State and local taxes – see page 78. On the federal return, the itemized deduction for state and local taxes (SALT) is limited to a total of $10,000. 
    • CA does not conform in allowing state income tax or state sales tax as itemized deductions, regardless of amount. 
    • For real estate and personal property taxes, CA does not conform to the $10,000 limit, though it’s rare for taxpayers we serve to exceed that amount. 
      • If the taxpayer is itemizing on the CA return, enter all real estate and personal property taxes paid on the federal Schedule A.
    • TaxSlayer automatically flows real estate and personal property tax amounts to CA Schedule CA Part II, lines 5b and 5c, while eliminating the state income tax or state sales tax amount.
  • [6] Foreign income taxes when taken as a Schedule A deduction rather than a credit (see page 82)
    • 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 taxes; subtract only foreign taxes).
      • Note: Foreign taxes only go on Schedule A – and require a CA adjustment - if they exceed $300 (if MFJ, $600).
  • [8] Home mortgage interest and points
    • CA does not conform to the reduction in mortgage and line-of-credit interest that can be deducted on the federal return, for loans made after December 15, 2017; the total was reduced to $750,000. Interest paid is still deductible on the CA return, up to $1 million in loans ($500,000 MFS), to the extent that these loans were used to buy, build, or improve a home. 
      • Any difference (interest on loan amounts over $750,000 but not exceeding $1 million) must be entered as a manual addition.
    • CA does not confirm to the elimination of interest and points on up to $100,000 of “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 entered as a manual addition.
    • Calculation of what is acquisition debt (buy, build, or improve) versus non-acquisition debt (home equity debt) is complicated; see page 83 for a detailed discussion.
  • [11-2] Gifts to Charity
  • Educator expenses for which a federal deduction was claimed on Schedule 1 Line 11 (see page 70) 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 85).  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 65
    • The CA adjustment must be entered as a manual subtraction; in TaxSlayer, this usually goes in the “Other Miscellaneous Itemized Deductions” section.  
  • [16] Repayment of unemployment benefits for a prior year – see page 64
    • 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.
    • Beginning with tax year 2018, the entire category of itemized expenses subject to a 2%-of-AGI reduction, such as the expense of a safe deposit box, or tax preparation fees, is no longer deductible on the federal Schedule A. However, California conforms to allowable federal Schedule A deductions as of 2015, so such expenses are still allowable as a CA itemized deductions subject to a 2%-of-AGI reduction. [The 2% is based on the federal AGI.] 
    • Most of the “2%-of-AGI reduction” expenses allowed 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” deductible expenses by continuing to allow them to be entered in the federal Schedule A section. 
      • These expenses are described in the section on page 87.
      • These expenses flow automatically from the federal Schedule A to Part II of CA Schedule CA.
    • There are two “2%-of-AGI reduction” expenses that are allowable on the CA return but are not included in the federal Schedule A. Both need to be entered as manual additions in Part II of CA Schedule CA.
  • Educator expenses for which a federal deduction was claimed on Schedule 1 Line 11 (see page 70). (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 93) were work-related. If they were, then they are deductible using CA Schedule CA, either a subtraction of income (offsetting Schedule C net income, which is preferred, but there may not be any Schedule C net income), or as an additional itemized deduction, a manual subtraction, as “Other Miscellaneous Itemized Deduction”.

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