My W2 was automatically imported, and the information in the form is all correct. I also noted that I will withdraw the excess. It still says there's an error.
it will report an error until you finish the 8889 section (HSA) in the medical section
The 8889 form is where it says “there are no excess employer contributions.” The auto-populated information shows the excess, but it still says there are none. I even tried to enter 0 even though that’s incorrect just to see if the error would go away. It did not.
"There are no Excess Employer Contributions" - where does TurboTax say this? In the Review? In the HSA interview?
While we are on the subject, did you make any direct, personal contribution to your HSA (I.e., not through your employer)? There is a point at which TurboTax will ask you if the excess contributions were made through the employer or not.
The difference is that an excess contribution made through your employer gets added back to Other Income on line 8f on Schedule 1 (1040), whereas an excess made directly by you reduces the contribution on line 13 on Schedule 1 (1040).
"even though my W2 correctly identifies an excess in 12 code W. " - I don't know what this means. The W-2 has no idea if there is an excess in HSA contributions. All the W-2 knows is that X amount of HSA contributions were made through the employer.
So, please back up and tell us what the real problem is.