Retirement tax questions

1) No, it seems you didn’t have any taxable earnings for the Roth conversion. When you performed the recharacterization it is deemed that you made the $6,000 contribution to the traditional IRA and never to the Roth IRA. Therefore, your basis in the traditional IRA was $6,000. Any gains or losses that occurred in the Roth before the recharacterization are deemed to have taken place in the traditional IRA because you made the recharacterization.

2) It seems after you recharacterized your contribution you had some earnings in the traditional IRA. But they were still not more than you had lost before. Therefore, your conversion won't be taxable since you had a basis of $6,000. You should have the leftover basis on line 14 of Form 8606 to use in future years.

3) You will enter the recharacterization when you enter the contribution to the Roth IRA:

1. Login to your TurboTax Account 
2. Click on "Search" on the top right and type “IRA contributions” 
3. Click on “Jump to IRA contributions"
4. Select “Roth IRA”
5. Answer “No” to “Is This a Repayment of a Retirement Distribution
6. Enter the Roth contribution amount $6,000
7. Answer “Yes” to the recharacterized question on the “Did You Change Your Mind?” screen and enter the contribution amount of $6,000 (no earnings or losses)
8. TurboTax will ask for an explanation statement where it should be stated that the original $6,000.00 minus $1,358.03 loss was recharacterized.
9. On the screen "Choose Not to Deduct IRA Contributions" answer "Yes" (since you are doing a backdoor Roth. If you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a warning and then a screen saying $0 is deductible)

To enter the 1099-R conversion: 

1. Click on "Search" on the top right and type “1099-R”  
2. Click on “Jump to 1099-R”
3. Click "Continue" and enter the information from your 1099-R
4. Answer questions until you get to “Tell us if you moved the money through a rollover or conversion” and choose “I converted some or all of it to a Roth IRA”
5. On the "Review your 1099-R info" screen click "Continue" (after you entered all Form 1099-R)
6. Answer "yes" to "Any nondeductible Contributions to your IRA?" if you had any nondeductible contributions in prior years.
7. Answer the questions about the basis from line 14 of your 2021 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs