HSA interest on treasuries in California

amber91
amber91 Member Posts: 1 Newcomer
in State Filing

I have invested exclusively in federal treasury funds inside my HSA so that they're exempt from CA state tax, but I don't see a way to enter this in the questionnaire (it just asks if there was any interest or dividends inside the HSA). Any way to specify where the interest comes from, or should I just put $0 since it's not taxable?

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  • WrenD
    WrenD FreeTaxUSA Agent Posts: 37

    Hello amber91!

    If your HSA only earned interest or dividends from federal Treasury obligations, that income is exempt from California state income tax under California Revenue and Taxation Code Section 17131. The FreeTaxUSA questionnaire does not allow you to specify the source of the HSA earnings, so it would be appropriate to enter $0 for CA taxable HSA interest. Be sure to keep records showing that all HSA earnings came from U.S. Treasury funds in case CA ever questions it.

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