@bobsmith wrote:
My question is should I include the recharacterized $2,000 as basis of the Traditional IRA for conversion or just the $500 after-tax contribution that is on the Form 8606? I am assuming part of the $20,000 distribution included the recharacterized $2,000 which was after-tax. Or was this already considered with the $0 taxable amount on the Roth IRA 1099-R?
The $2,000 is basis carried into 2020 from 2019. Your 2019 Form 8606 should have this amount present on Form 8606 line 1 and falling through to line 14 for carryover to line 2 of your 2020 Form 8606 to be added to the $6,000 on line 1. If your 2019 Form 8606 does not show this $2,000 you must amend that Form 8606 (or file it if none was previously filed).
If you began your 2020 tax return by transferring in your 2019 tax return that included $2,000 on line 14, TurboTax will have already included the $2,000 on line 2 of your 2020 Form 8606. Otherwise you'll need to correct the line 2 amount by clicking the Continue button on the page that lists the Forms 1099-R that you've entered, then enter $2,000 as the basis for years prior to 2020.
