How to remove the area of one layer from the layer below

You are showing us a placed, not yet vectorised image. In this state, you can only apply your lettering as an opacity mask.

However, if you need real paths, the image must be vectorised. You can then use the "other" tools (Shape Builder Tool, Pathfinder panel or Live Paint Tool).

What is inside the other "layer"? And do you need to keep the layer?

Usually you do this kind of stuff using opacity masks, compound paths or compound shapes. Pathfinder operations help with that. As well as the shapebuilder tool.

But if you do not succeed, please tell us the details.

Hello @Shane22289759zptk,

Thanks for reaching out. Would you mind trying the suggestions in this tutorial (https://adobe.ly/4bRKIpc) and letting us know if they help?