I took funds from my IRA to apply to my RMD. If RMD is suspended for 2020. Turbotax indicates a penalty for underpayment. How should I report this information?

Delete the 1099-R you entered and re-enter.

Answer the RMD question that "None of this distribution was a RMD" or "RMD not required" depending on the TurboTax version - because it was NOT a RMD, there were no 2020 RMD's.