Yes, since this new excess for 2020 is removed after the due date of the 2020 tax return you only need to remove the new excess contribution of $1,170 and not the earnings. But you will have to pay the 6% penalty for 2020 and 2021 since the excess wasn't removed by December 31, 2021. You do not need to request an excess contribution distribution, you can take a regular distribution since it is after the due date of the 2020 return. You have until December 31, 2022, to remove the excess to avoid another 6% penalty on your 2022 return. This regular distribution will be reported on your 2022 tax return but it won't be taxable.
Yes, once you amended your 2020 return to report the return of the first excess contribution and earnings (which created the second excess of $1,170) you won't have to change anything else on your 2020 tax return. TurboTax will create Form 5329 for the 6% excess contribution penalty on the $1,170 and you are done with 2020.
Yes, you will have to pay the 6% excess contribution on your 2021 return. This will be the last year you have to pay the penalty on the $1,170 excess if you remove the excess with a regular distribution by December 31, 2022.
@mgreen10
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