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(1) So it sounds like doing excess contribution removal is going to be more head ache in the future, it's why you recommend doing non-qualifying withdrawal instead. I found detailed explanation of this in Turbotax help as shown below  (with recommended by you option highlighted).But how will I report the non-qualifying withdrawal in Turbotax 2023? I don't know which options to choose below.

1a) Should I choose option 1 above because we are withdrawing the amount of excess contribution, just as non-qualifying purchase?

1b) Or should I choose option 3 since we are not removing the excess withdrawal directly? (if so, how Turbotax 2024 will know not to ask about these $54 excess?)

1c) Can my wife withdraw more than excess plus interest in order for this to work? I don't think we can figure out interest reliably, so I'm guessing significantly larger sum than the interest (say, $75) should cover it, right?

Working on your questions for question (2) now...