Yes, you can deduct the portion of your $12,750 of medical expenses that exceed 2% of your income on your New Jersey return even though you paid for a large part of it through an HSA. You will enter the full amount and TurboTax will calculate deduct the 2% from it.
This is because NJ does not give you a tax break for contributions to your HSA so that income SHOULD have been included in your state wages, even though they were not in your federal wages. So unlike the IRS, where this money was already not taxed so it is not deductible, NJ DID tax this money so when you used it, it was no different than paying with your checking account.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
