Apparently the traditional IRA was moved from Merrill Edge to Vanguard by nonreportable trustee-to-trustee transfer and then was converted to Roth at Vanguard. With Roth conversions in 2021 at Vanguard of $7,500, $7,000 and $5,000 = $19,500, you have $19,500 of Roth conversions in 2021 properly reported on the code-2 Form 1099-R.
The nondeductible contribution for 2020 was reportable on your wife's 2020 Form 8606. The amount from line 14 of the 2020 Form 8606 (presumably $7,000) transfers to line 2 of her 2021 Form 8606 to be combined with the $5,000 nondeductible contribution for 2021, and the resulting $12,000 is subtracted from the $19,500 of Roth conversions leaving $7,500 as taxable on the 2021 tax return.
Nothing about these Roth conversions was reportable on the 2020 tax return.
