Does your spouse still have the FSA (like through 2017)? If so, you weren't eligible for 2017 either (I guess you realized that).
1. You must amend your 2016 return and show that your HDHP coverage was "None" for 2016 (you had HDHP coverage but you weren't eligible).
2. It is too late to fix your excess contribution for 2016 (that is, you can't take the excess for 2016 out without incurring a 20% penalty (don't do that). So you will have to roll the entire amount over as a carryover to 2017. TurboTax will calculate the 6% penalty, and you will pay that as part of the amended return process (1040X).
3. When you do your 2017 return, you need to answer the question "Did you 'overfund' your 2016 return?" with "yes". What this question is actually asking is did you have a carryover (yes).
4. Enter the amount of the carryover to this screen (which should be the full $1,500).
5. If you are still not eligible to contribute to your HSA, then a new excess will be generated. Tell TurboTax that you will withdraw this by the due date (which is tomorrow, April 17th).
6. Then you MUST contact your HSA administrator no later than end-of-date tomorrow (April 17th) to initiate the "return of excess contributions". If your HSA administrator asks, tell them that you have paid the 6% penalty for 2016 and that the amount has carried over to 2017 to become a 2017 excess, which you can withdraw by tomorrow.
7. If you can't accomplish this by end-of-day tomorrow, then file an extension (form 4868). This will give you until October 15 2018 to sort this out (yes, the withdrawal must be done by the due date "with extensions").
Because you did not contribute anything in 2017, this should eliminate the excess and the 6% will stop.
Note that next year, you will be asked again about "Did you overfund your HSA in 2017". If you successfully withdraw the excess this year, then answer "no", because you cured it when you withdrew the excess in a timely fashion.
