After you indicate that you made HSA contributions for 2022 in the TurboTax program, you’ll see a screen saying, “Let’s maximize your contribution limit,” where you indicate high-deductible coverage or “Medicare or None” (which you’ll of course do for July through December). After you continue from that screen, the program should tell you the excess amount, advising you to take it out by April 18, and asking how much you will take out. Once you do this, the tax treatment should be correct, with the “pre-tax” benefit (if the contributions were made at work) undone on line 1f of Schedule 1, flowing through to line 8 of your 1040.
Note that your $1,500 distribution amount is handled earlier in the process. Answering “yes” on the “Did you use your HSA to pay for anything in 2022?” screen allows you to enter your 1099-SA numbers box-for-box. The program asks if the funds were used on qualified expenses, then calculates the tax (if any). It then moves on to the screens (discussed above) regarding contributions, which are usually a completely separate topic.
Regarding 2023, since contributions to your HSA will be a non-issue (assuming you continue with Medicare), you’ll have distributions (or nothing at all) to report on that return. You can keep the account itself as long as you want (as Medicare only affects the ability to contribute additional funds), and tax treatment of the money that eventually comes out will be the same as always (no tax if used on qualified expenses).
@Cinna13604, if you're not seeing the screens I mentioned when you get back into the program, please re-post here, so we can make sure your HSA is correctly reported!
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