1. You did not have an excess contribution on your 2023 return. The gains ($800) are deemed to be earned in the traditional IRA account. It seems you entered the recharacterization correctly on your 2023 return. Do not request an excess contribution plus earning distribution.
2. You can ignore Form 1099-R with code R since you already reported the recharacterization on your 2023 return.
You will enter Form 1099-R with code 2 on your 2024 tax return:
- Click on "Search" on the top right and type “1099-R”
- Click on “Jump to 1099-R”
- Click "Continue" and enter the information from your 1099-R
- Answer questions until you get to “Tell us if you moved the money through a rollover or conversion” and choose “I converted some or all of it to a Roth IRA”
- On the "Review your 1099-R info" screen click "Continue"
- Answer "Yes" to "Any nondeductible Contributions to your IRA?" if you had any nondeductible contributions in prior years.
- Answer the questions about the basis from line 14 of your 2023 Form 8606 ($7,500) and the value of all traditional, SEP, and SIMPLE IRAs
You should have a 2023 Form 8606 with a $7,500 basis when you entered the recharacterization on your 2023 return and made it nondeductible.
3. There is no need to fill out Form 5329
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