If you are filing as "married filing jointly", your child must have a social security number and live with you (or the other parent, or both) for more than half the year.  Dependents must be US citizens, resident aliens (green card holders) or resident aliens (lived in the US more than half the year).

Since your child is a citizen, she can be claimed as a dependent even if you lived outside the US the entire year, and that question shouldn't even be asked.  I am aware of a different bug in the dependent interview, maybe this is another.  Or, maybe you did not enter a valid SSN, and that triggered that question.

Answering "12 months" should solve the short term problem, as in fact it doesn't matter.  I am more concerned that you should not see that question at all.  Does your child have an SSN?  If not, delete the child and don't add the child until you have an SSN, and don't file your tax return until the child has an SSN.  If your child does have an SSN, make sure it was entered correctly. 

Where exactly does TurboTax ask that question? What section or topic is it in? When I enter a dependent in TurboTax, it asks "How many months did Sally live with you in 2020?" It does not say "in the USA."

There should be a "in USA" question for the Earned Income Credit.

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@AmeliesUncle wrote:

There should be a "in USA" question for the Earned Income Credit.

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That may be it.  For EIC, the child must live in the US with the parents more than half the year.  Children living overseas generally don't qualify.

However, there is an exception and military families deployed overseas are considered to live in the US for purposes of EIC, so you can answer all 12 months.  Again though, I would think that Turbotax should know you are on active duty and should not ask the question, or should ask it of you in a different way.  Still, you can answer "all year" that the child lived in the US with you.