You'll need to amend your 2020 and 2021 tax returns is only to show and pay the excess contribution penalties. If your already filed 2022 tax return did not include Forms 5329 showing the excess contribution penalties for the $14,000 each in excess contributions carried in from 2022, you'll need to amend that too. Nothing about the 2023 distributions goes on these amendments.
The $14,000 distributed to each of you goes on your 2023 tax return. Although reportable, this is a nontaxable distribution of contribution basis. If the Roth IRAs are qualified, this will go only on 2023 Forms 5329 to be subtracted from the excesses carried in from 2022. If the Roth IRAs are not qualified, your 2023 tax return will also include Forms 8606 to determine that the taxable amount is zero by subtracting contribution basis of $14,000 each.
The return of contribution is reported by only by the explanation statement to be included filed with the amendment of your 2022 tax return, describing how the return of each 2022 $7,000 contribution was accomplished by the distribution of the loss-adjusted amounts. This is nontaxable since there was an attributable loss rather than a taxable gain.
