As the HSA custodian indicated, the problem is that you made a regular distribution from your HSA, not a return of contribution; a regular distribution does not constitute a return of contribution. By doing it incorrectly, you have incurred double taxation of and a 20% additional penalty if you are under age 65. You'll also need to amend your 2022 tax return by telling 2022 TurboTax that you did not have the excess contribution returned.
You'll need to tell 2023 TurboTax that you had an uncorrected $1,900 excess contribution carried in from 2022 (from which the taxable HSA contribution you received in 2023 will be subtracted on your 2023 Form 5329 to eliminate the penalty for 2023).
This answer has been verified for accuracy by an Intuit expert employee
