If you entered any medical expenses in the federal interview, they will flow to your New Jersey tax return, even if you don't use itemized deductions on your federal tax return. The TurboTax interview for New Jersey will ask you if you have medical expenses that you did not enter in the federal interview, or if you want to review the medical expenses that flowed from the federal return. Enter the full amount you paid that was not reimbursed by insurance. TurboTax will subtract 2% of your New Jersey gross income.
On your New Jersey state return, you can deduct from your gross income certain medical expenses that you paid during the year for yourself, your spouse or domestic partner, and your dependents. However, you cannot deduct expenses for which you were reimbursed. Only expenses that exceed 2% of your income can be deducted.
See here for more information from the State of New Jersey on this topic.
See this thread for further discussion on this topic.
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