That's not what TurboTax is doing. TurboTax is properly treating $8 of your $7,500 Roth contribution as being taxable, it's not treating the $8 remaining in your traditional IRA as being taxable. $8 of your basis in nondeductible traditional IRAs remains in your traditional IRA, shown on line 14 of your Form 8606. It would have made more sense to convert the entire $7,508 so that all $7,500 of your basis would have been applied to the conversion., leaving no money and no basis in your traditional IRAs. Just convert everything in your traditional IRAs in 2024 so that you end up with a zero year-end value in traditional IRAs it it will all sort itself out.
