"By the time I realized this, I'd already contributed to my HSA for 2024, which I was eligible for ($4150). I then distributed $3650 worth of 2024 contributions as excess."
This is the problem. Only actual excess contributions are eligible for return and none of the $4,150 deposited as a 2024 contribution was actually an excess contribution for 2024 on its own. Because of this, TurboTax does not allow you to claim that any of the 2024 contribution was returned.
Unfortunately, there is no good workaround for this situation. Technically the $3,650 distributed constitutes an ordinary distribution rather than a return of contribution (since no return of contribution before the due date of your tax return was actually permitted). You could report it as an ordinary taxable distribution (code 1 in box 3 with nothing in box 2) and provide explanation with your printed and mailed tax return, but that would subject you to a 20% extra tax on the $3,650. The only other alternative I can think of would be to change the amount entered with code W in box 12 on TurboTax's 1099-R form to show only $500 contributed for 2024, but I can't say that that the IRS would agree with that. It would disagree with the amount shown on the Form 5498-SA issued by the HSA custodian and would disagree with the amount shown on the W-2 provided to the IRS by your employer.
