2. No, you can't keep both. Because the FSA can be used to pay for medical expenses for the owner, their spouse, or dependents, it counts as "other medical coverage" and disqualifies you from making any HSA contributions.
1. In Turbotax, answer "no" to the question about a qualifying HDHP. (Because you had other coverage, you did not have a qualifying HDHP.). Your workplace contributions are captured on your W-2, and you must enter separate out of pocket contributions (if any) when asked later. Turbotax will then tell you that you have excess contributions of $7100. You must remove those contributions by the filing deadline of May 17. This is not a normal withdrawal, it is a special "withdrawal of excess contribution" and may require a special form or procedure with the HSA bank. You must also withdraw any earnings due to the excess contribution, which the bank will do automatically, and which you will report as taxable income on your 2021 tax return. The excess contributions that you removed from the HSA will be added back to your taxable wages.
If you don't remove the excess, they will still be added to your taxable wages, plus you will pay a 6% penalty, and this 6% penalty will continue through every future year that the excess funds remain in the HSA.
If your balance as of 12/31/2020 is less than the excess, remove the entire balance as of 12/31/2020. The 6% penalty is based on the amount of excess contributions in the account, or the total balance of the account, whichever is lower.
