I moved to California in 2024 and last year I just added my HSA dividends under "additions" for the Ordinary Dividends line on my California return. But it occurred to me for this year that some of them must be Qualified Dividends and I'm wondering if anyone has tried to report qualified vs non-qualified dividends? The difficulty is that HSAs don't provide tax forms that specify the amounts that are qualified.
California HSA dividends qualified vs non qualified
byu/maracle6 intax
Posted by maracle6
6 Comments
It doesn’t matter for California. There is no reduced rate for qualified dividends in California.
California taxes non-qualified and qualified dividends the same way, so it doesn’t matter. (Also, this is the first time I learned that California taxes dividends in HSA accounts; I didn’t realize it was *that* grabby.)
CA doesn’t tax qualified and non qualified dividends differently. So this makes no difference.
never seen a breakdown for hsa dividends. good luck finding clarity.
Others have already responded about qualified dividends been moot for CA given that it does not have any favorable tax rates on investments. However, you could consider investing in a fund that is wholly or partially state tax exempt. That may counter growth opportunity in the HSA; however, if you balance it as part of your overall portfolio, it can be a strategy. For example, for TY 2024, 97% of Fidelity’s FDLXX was CA tax exempt, resulting in a minimal fed-CA income adjustment.
Does not matter for California, there is not a preferential rate.