When TurboTax determines that you have made excess contributions to your HSA for 2020, and if the contributions are through your employer (i.e., code W in box 12 on your W-2), then TurboTax automatically adds the amount of the excess to Other Income on line 8 of Schedule 1 (1040). This increases your taxable income and tax.
If, on the other hand, the excess contributions were made by direct contributions by you to the HSA, then the amount that would have been on line 12 of Schedule 1 (1040) as an adjustment to your Adjusted Gross Income, is reduced so that your income ends up being the same was it would have been if the contributions were through the employer.
So the result is the same either way.
Don't worry, you will pay the tax on the excess contributions, either way. And early next year, you will receive a special 1099-SA, reporting the earnings on the excess before you withdrew them (I hope you do before this coming Monday, the 17th) so that you can tax on the earnings for tax year 2021.
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