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Deductions & credits
TurboTax assumes that when you enter medical expenses on the federal schedule A that you enter ALL medical expenses, even expenses reimbursed by insurance or an HSA. Many people don't add medical expenses if they were reimbursed by insurance - they just add the unreimbursed expenses and are done with it.
That is all well and good except for two groups of people: those in state like Arizona that allow extended medical deductions, and those who use their HSAs.
OK, that is why you should do what Volvogirl suggests to enter all expenses on the federal return. The reason that you still get zeros is probably because of a feature of TurboTax that most people don't know about: (1) the taxpayer has to manually enter insurance reimbursements, but (2) the HSA reimbursement are automatically transferred to Schedule A. That is, TurboTax adds up all the 1099-SA distributions for medical expenses and transfers that amount to Schedule A as a reimbursement.
So, if you don't enter each HSA expense in Schedule A, you need to enter a single HSA expense as a Miscellaneous expense on Schedule A, the amount being the sum of all HSA distributions (the 1099-SA forms with distribution code of '1'), and the description being something like "HSA medical expenses". In this way, I am hoping your Schedule A won't zero out, and that Arizona does its thing...
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