When TurboTax asks you how much of your traditional IRA contribution you switched (recharacterized), enter $4,800. The result of recharacterizing $4,800 of your $7,500 traditional IRA contribution is that you have a $2,700 traditional IRA contribution and a $4,800 Roth IRA contribution. The $500 of earnings simply become $500 of earnings in the Roth IRA.
