I just received two bills from the state of the california franchise tax board saying that my state tax for 2015 and 2016 are missing a few thousands plus interest. The reason was that turbotax way underestimated my CA taxable income by using the Schedule CA form. In the words of the notice:
We have made an adjustment to your California taxable income for the reasons stated below. As a result, we have recomputed your tax liability based on this revised taxable income.
A review of your return indicates that your schedule CA is incorrect. Schedule CA is used only to report adjustments to federal adjusted gross income (AGI) when that income is taxed differently for state and federal purposes. The difference in taxation must arise from differences between state and federal tax law, not from the source of the income.
We consider you to be a resident of this state during the taxable year and, as such, you are taxable on income from all sources.
We disallowed the deduction for those wages you subtracted on your Schedule CA (540) California Adjustments-Residents. As a California resident, all your wages are taxable, including those wages earned outside of California.
The point is, neither my wife nor I worked outside California during those two years, so there was no way we entered out of state information in turbotax. So why would turbotax make such a big mistake? Thanks for your help.