I contributed excess funds to my HSA in 2023. In early 2025 I withdrew those funds for Tax year 2023. Turbo Tax is saying that I still have 2023 excess contribution.

The issue is that excess contributions need to be withdrawn by the due date of the return - in this case, April 15, 2024.

Since you did not do that, the excess in 2023 carried over to 2024. TurboTax tried to apply the carryover excess to line 2 (8889) as a "personal" contribution, but many taxpayers do not realize this so when they continue to contribute large amounts, they just create a new excess. But when they try to withdraw the new excess, TurboTax will stop them because in the next year, they cannot withdraw the carryover excess penalty-free.

So, how to stop it? When you enter the 1099-SA for your withdrawal of the excess on your 2024 return, then say that it was NOT for medical expenses. TurboTax will add the box 1 amount to Other Income, and add a 20% penalty, but at least the excess will be over and done with.