The general design tendency in TurboTax is to enter things on the federal return and to let them flow to the states. This is true of medical expenses that would go on Schedule A of the federal return.
Note that TurboTax automatically carries HSA distributions to Schedule A as a type of reimbursement. Therefore, to keep things equal, you need to make a one-line entry at the end of the medical expenses section on Schedule A (Federal->Deductions & Credits->Medical->Medical Expenses) that's says "Medical expense reimbursed by the HSA" along with the amount of the HSA distributions.
Medical expenses are sometimes deductible in Alabama, even if
you take the Standard Deduction on the federal return.
You should enter medical expenses on the
federal return (Federal->Deductions & Credits->Medical) even
if you won't get a deduction on the federal return, because they will carry
down to Alabama and, if deductible, will reduce your Alabama tax due or
increase your Alabama refund. This is why we are doing the HSA distribution and expenses this way.
Also,
if you enter the medical expenses are entered this way (on the federal return),
then the correct limits in Alabama are applied. If you entered the medical
expenses on the state return as a deduction on the "Let's Check for any
Alabama Deductions" screen (at the bottom under the subheading "Other
Deductions"), you would be responsible for calculating the correct amount
that can be deducted.
