Unknown file extension ".ts" when setting up typescript

Question

I am having some troubles with setting up typescript compiler with webstorm for the first time.

This is the error I get: Unknown file extension ".ts" when the webstorm runs the test with:

/usr/local/bin/node /path/to/mocha/mocha --require ts-node/register --ui bdd --reporter /Applications/WebStorm.app/Contents/plugins/NodeJS/js/mocha-intellij/lib/mochaIntellijReporter.js /path/to/testfile/test-index.ts

This is project structure:

and this are the contents of tsconfig.json and source/tsconfig.json

tsconfig.json:

{
  "compilerOptions": {
    "sourceMap": true,
    "declaration": false,
    "downlevelIteration": true,
    "experimentalDecorators": true,
    "moduleResolution": "node",
    "importHelpers": true,
    "target": "es2015",
    "module": "es2020",
    "lib": [
      "es2018",
      "dom"
    ]
  },
  "exclude": [
    "source",
    "node_modules",
    "dist"
  ]
}

source/tsconfig.json:

{
  "compilerOptions": {
    "outDir": "../dist",
    "sourceMap": true,
    "declaration": true,
    "downlevelIteration": true,
    "experimentalDecorators": true,
    "moduleResolution": "node",
    "importHelpers": true,
    "target": "ES2015",
    "module": "es2020",
    "lib": [
      "es2018",
      "dom"
    ]
  },
}

package.json:

{
  "name": "page",
  "version": "1.0.0",
  "description": "",
  "main": "index.js",
  "scripts": {
    "test": "echo \"Error: no test specified\" && exit 1"
  },
  "keywords": [],
  "author": "",
  "license": "ISC",
  "dependencies": {
    "@types/mocha": "^9.1.0",
    "axios": "^0.26.1",
    "dateformat": "^5.0.3",
    "mariadb": "^3.0.0",
    "mocha": "^9.2.2"
  },
  "devDependencies": {
    "@types/node": "^17.0.23",
    "nyc": "^15.1.0",
    "ts-node": "^10.7.0",
    "typescript": "^4.6.3"
  }
}

if I remove the line "module": "es2020", than the error changes to SyntaxError: Unexpected token 'export'

Any idea what I did wrong?