Solved
State: California. As I mention, I understand employer contribution is taxable in California, but is it subject to federal income tax? Thanks.
Turbotax will assume your HSA contributions are taxable until you get to the place in the interview where you certify that you had a qualifying HDHP and for how many months of the year. This used to come up in the W-2 interview if you have a code W in box 12, but the question can also be found if you run the HSA interview on the Deductions and Credits page. If you jump around in the program, you might accidentally skip the question.
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