I understand that you can withdraw your excess Roth contribution before filing your 2021 taxes. However, in my case, my $7000 contribution lost money so it's now worth around $6700. When I go into Turbotax and enter $7000 for a contribution, it tells me I don't qualify due to AGI. TT says I can withdraw contribution + earnings. But when I put in $6700 for the amount of my withdrawl, it thinks that I am not taking all of my excess contribution and penalizes me for it.
What should I do? Can I just say I didn't make any Roth contributions in 2021 since I will be taking out the excess amount ($6700) before I file next month?
Enter $7,000 as the amount withdrawn before the due date of your return so you don't get penalized for an excess contribution. This is the amount you contributed and is just needed for TurboTax.
Your IRA custodian will report the actual amount withdrawn. Next year you will get a Form 1099-R for that amount.
For a more complete discussion: Withdraw Excess Roth Contributions at a Loss