You can cancel it. Contact the IRA financial institution (custodian) to do that. Then just don't enter it into TurboTax.
You can convert it to a Roth, but that can be complicated* if you currently have traditional IRA(s). The conversion will be treated as a 2017 tax event not for 2016.
* This
year's (2016) contribution cannot be converted in isolation from any existing
traditional (including rollover) IRA(s). It's best explained by example. Let's
say you have a $95,000 balance in all your existing traditional IRAs and that
balance consist of $45,000 in deductible contributions, $10,000 in previous
non-deductible contributions and $40,000 in earnings (interest, dividends &
capital gains). This year you make a $5000 non-deductible contribution and
convert $5000 to a Roth. Only 15% of the $5000 conversion ($750) will be tax
free. Your basis, in all your IRAs, is $15,000 (the previous $10,000 of
non-deductible contributions plus this year's $5000 contribution). TurboTax
will divide that $15,000 basis by the $100,000 balance ($95K+5K) to arrive at
the 15% tax free ratio. This is the way the IRS requires it to be done. The
calculations will be shown on form 8606.
See: http://www.bankrate.com/finance/retirement/drawback-one-type-roth-conversion.aspx
http://thefinancebuff.com/how-to-report-backdoor-roth-in-turbotax.html
