I think I have two options:
Option 1: If I selected the 2 months I was eligible in Oct & Nov instead of the actual Nov & Dec, then TT is doing the right limit calculation and automatically add my $800 excess contribution to taxable income. This is because the last month rule does not apply.
Option 2: Let TT does its thing and when I file 2022 tax return, it would know I had to withdraw the excess contribution in early 2021 by asking me: "Did you overfund your HSA in 2021?"
Then I would say yes and let it know I withdraw to avoid the penalty.
Does this sound like the correct approach?
I think this would have been so much simple if TT could ask do you want to apply last month rule.
