Thanks! Yes, by refund I'm referring to the withdrawn money to correct the excess contribution - sorry for the confusion. This answers it for the most part, although to respond to your confusion about double taxation -
Right now I have that California taxes the original HSA contribution (which includes both the "true" HSA contribution and the excess contribution - California does not distinguish between these two) and the federal government taxes only the excess contribution. This still leaves the question of Arizona in the air since the money was withdrawn while I was an Arizona resident. Would Arizona also tax the withdrawn money as income? (The federal government does, but I was subject to federal government taxes this entire year, so anything I incurred while in California would also be counted on the federal return. The key difference is that I wasn't subject to Arizona taxes this entire year.) If this withdrawal is considered part of the income I incurred while an Arizona resident (and thus subject to Arizona tax), the withdrawn money is taxed by both California and Arizona. For California, it would have been included in the original taxable HSA contribution and for Arizona it would be taxed when I report the excess contribution withdrawal as income. The question is mainly whether this needs to be reported as excess contribution withdrawal to Arizona (I think the California question is clear at this point - it was already taxed in California when I added it to my HSA). Since the withdrawal happened while I was an Arizona resident, it seems like the answer is yes, but I'm confused because fixing the excess withdrawal as fixing an issue that was made with my California income while I was a California resident.
