Health Care

Health Care

How do health care reform and taxes connect? The Affordable Care Act is single largest change to the tax code in two decades. Find help navigating the complexities of the new health care legislation, Medicare, Medicaid and other medical deductions.

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Pioneer
Posts: 1
Registered: ‎02-24-2016

CA HSA Distribution Math Error in State Form

On Line 40j of Schedule CA (540), you enter your HSA Distributions. These distributions are deductable to the extent they exceed 7.5% of Federal AGI (p6 Schedule CA (540) Instructions 2015 (REV 01-16)).  HRBLOCK software does not do this calculation.  But enters the full amount on Line 41.  I think this is an error in the software.  Below are the instructions for line 40.

 

  • Health Savings Account (HSA) Distributions – If you received a tax-free HSA
    distribution for qualified medical expenses, enter the qualified expenses paid
    that exceed 7.5% of federal AGI as an adjustment to itemized deductions. To
    determine the amount of the itemized deduction adjustment:
    • Calculate the medical expense deduction for California.
    • Calculate the medical expense deduction for federal.
    • Subtract the federal amount from the California amount. Enter the amount
    on line 41, as a positive amount.

I looked everywhere on the web site for a place to ask this question directly to HRBLOCK, but it seams that they don't want email.

Pioneer
Posts: 1
Registered: ‎04-13-2016

Re: CA HSA Distribution Math Error in State Form

Looks like they just fixed it. I was submitting my return and it said I needed to update software, when I did I owed and additional $600.  The old one had the HSA included, the update removed it.

Esteemed Pioneer
Posts: 24
Registered: ‎08-20-2015

Re: CA HSA Distribution Math Error in State Form

I understand the instructions on the form and the software is calculating.  But, can someone give me a sighting for California that this deduction does NOT need to be for only current year incurred expenses.   Having not withdrawn from the HSA  account for several years, I decided to reimburse myself for expenses that were incurred from 2009 through 2016.  I can't imagine that I can deduct the amount over the 7.5% AGI on CA for all the costs incurred prior to 2016.

Pioneer
Posts: 2
Registered: ‎03-12-2017

Re: CA HSA Distribution Math Error in State Form

The problem mmurrayy originally posted about still exists in the 2016 tax year version, as of the download update on Mar 12, 2107.

Pioneer
Posts: 2
Registered: ‎03-12-2017

Re: CA HSA Distribution Math Error in State Form

The problem documented above still exists for the 2017 HRBlock version. However a new wrinkle exists: For the 2017 tax year the Federal threshold is now 7.5%, no longer 10%. That means with California's threshold also at 7.5% for the Fed AGI, the calculation should always net out to be zero.