cannot write file because it would overwrite input file

js & ts in same workspace

{
  "compilerOptions": {
    // Tells TypeScript to read `.js` files, as normally they are
    // ignored as source files.
    "allowJs": true,
    // Generate `d.ts` files.
    "declaration": true,
    // This compiler run should only output `d.ts` files.
    "emitDeclarationOnly": true,
    // Types should go into this directory. Removing this would place
    // the `.d.ts` files next to the `.js` files.
    "outDir": "dist"
  }
}

TypeScript: cannot write file .d.ts because it would overwrite input file

There's countless issues about this error and I thought it would be useful to write a clear explanation of what's going on and a summary of the possible solutions.

https://www.codejam.info/2021/10/typescript-cannot-write-file-overwrite-input.html