I still don't understand something.
If you withdrew the excess for 2016 and 2017 in early 2018 and you got a 1099-SA showing this, this means that you no longer had a carryover to carry over to 2018 or 2019 tax years. So if you did not answer "yes" to the overfunding question for the 2019 return, how can TurboTax know to carry over the excess?
I also have concerns with your HSA custodian's policies. If you did not withdrew an excess contribution by the due date of the return, then it is too late.
The only ways you can fix this is to (1) reduce your contributions the following year so that the excess can be applied as a "personal" contribution while staying under the contribution limit. or (2) make a distribution that is not for qualified medical expenses. Since #2 requires that you pay tax on the distribution as well as pay a 20% penalty, #1 is definitely the less painful alternative.
However, it appears that while you requested the withdrawal in a timely fashion, your HSA custodian messed around and didn't get to it for ten days. I would take the stance that you did withdraw the amount in a timely fashion, and you will keep all the paperwork in your tax files.
The 1099-SA for 2018 (instead of 2017) will present a problem to the IRS if they ever ask about this; just tell them that this was an error on the part of the HSA custodian.
You said, "the 2017 excess contribution amount is not carried over to 2018 or 2019."
OK, so why are you also saying "we paid the 6% penalty tax and is also being carried over in 2019 too which I would like to fix going forward." If it is not carried over, why are you being charged the 6% penalty?
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