You got it BillM223 and Mike, Thanks a lot for help
I confirmed with my HSA custodian and confirmed that $263 is from 2022.
HSA custodian said "That is why we usually recommend not using the W2 for contribution amount per tax year. Your employer reported them since they were physically made in 2023, but they coded them as 2022 HSA contributions."
With this, the only option i believe is to put zero in Box 12 W and let employer know about this. I know they mostly will not submit corrected W-2 and will wait for the IRS letter :(
