Because the excess was not returned to the employer, each employer must report with code W in box 12 of the W-2 the actual amount they deposited into the HSA.
When 2023 TurboTax indicates that you have an excess contribution of $500, you'll indicate that you will "withdraw" the $500 of excess contribution by the filing deadline. TurboTax will include the $500 on line 8f of your 2023 Schedule 1, indicating that you had the $500 excess returned.
When you enter the code-2 2023 Form 1099-SA, TurboTax will also include the interest shown in box 2 of the Form 1099-SA on line 8f of your 2023 Schedule 1.
