I never said that the taxable amount is zero. I said that the taxable amount is the $585.87 on the $4,000 contribution for 2020 that was returned. A correct Form 1099-R will have $4,585.87 in box 1, $585.87 in box 2a box 2b Taxable amount not determined not marked and codes J an 8 in box 7.
I refer you to the instructions for 2020 Form 1099-R. See the top of page 12 where it says:
However, for the distribution of excess Roth IRA contributions, report the gross distribution in box 1 and only the earnings in box 2a. Enter Code J and Code 8 or P in box 7.
https://www.irs.gov/pub/irs-prior/i1099r--2020.pdf
Unless you and not Betterment did the earnings calculation, there is no reason for Betterment to have put anything other than the earnings amount in box 2a and no reason to have marked box 2b Taxable amount not determined. Even if they did have a good reason to mark box 2b Taxable amount not determined, the instructions for Form 1099-R say to leave box 2a blank under these circumstances. See this instructions for line 2a on page 11:
Generally, you must enter the taxable amount in box 2a. However, if you are unable to reasonably obtain the data needed to compute the taxable amount, leave this box blank.
On a code J8 Form 1099-R, having the same amount in box 2a as in box 1 would imply that the original contribution that generated the earnings shown in box 2a was $0, which is preposterous.
If Betterment is uncooperative in correcting their reporting error, you'll need to file a substitute Form 1099-R (Form 4852) to provide the correct reporting.
