When you indicate to TurboTax that you want to withdraw the excess contribution before the filing deadline, then TurboTax will add the excess contribution to "Other Income", so it will be taxed in 2016 automatically.
At some point, then the HSA plan administrator will send you the 1099-SA reflecting the excess contribution (which you won't pay tax on in 2017 because you already did in 2016), the earnings on the excess as computed by the plan administrator, and a distribution code of "2" which tells TurboTax to tax only the earnings in 2017.
The reason for this is that while your excess contribution was in the HSA, it presumably earned some small amount of money before you withdrew it. Only the plan administrator can determine how much the earnings were.
