There are differences between what the IRS and HSA plans consider to be eligible medical expenses, for example the HSA rules allow for over the counter drug items without a prescription but the IRS does not. The IRS accepts medicare supplement insurance (ie Medigap) but the HSA does not. There are other differences.
On the federal return I understand that I can make adjustments to the reported deduction amounts to fix this. However I am having problem with the state return (in my case California) because California does not allow a deduction for HSA contributions and therefore I should be able to report my total medical expenses without a reduction for HSA distributions. Turbotax brings over my reported medical expenses reduced by the HSA distributions, but I need to report the total amount of IRS accepted medical expense. How do I do this?
