In order to avoid the excise tax (often called a "penalty") for the carryover of excess HSA contributions, you must withdraw the excess before the due date of the return. That is, if the original excess HSA contribution was for tax year 2020 as you seem to say, then the withdrawal had to occur prior to April 15 or so 2021 (there are other dates possible, but they are all in 2021).
After that point, a new set of rules take over. To eliminate the carryover of the excess, you need to do one of two things:
1. While you are still under HDHP coverage, you should reduce your HSA contributions so that the carryover can be added to your contributions and yet the total is still less than the annual HSA contribution limit. In this was, the carryover is treated as a personal contribution and is used up. The carryover is then used up and ceases.
2. You make a distribution from your HSA but not for qualified medical purposes. When the 1099-SA from this distribution is entered, the amount of the distribution will be added to your income and as a incur a 20% penalty, but, again, the carryover will cease.
#1 costs you less, but #2 allows you to continue to contribute the maximum to your HSA.
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