Retirement tax questions

It sounds like you are being taxed because you may not have separately entered the contributions.  Even though they aren't deductible, they need to be entered.  For the 2023 tax return, you should have prepared a Form 8606 to report the $6,500 contribution - check your tax return to verify you did.  If not, you can do so now.  There may be a $50 late fee assessed unless you have cause.  See: About Form 8606, Nondeductible IRAs to get a pdf form and fill it out, if needed.

Here's how to enter the $6,500 from 2023:

1. Go to Wages & Income.
2. On the Your income and expenses screen, locate and select the Retirement Plans and Social Security section, then select  Revisit next to IRA, 401(k), Pension Plan Withdrawals (1099-R).
3. Choose the 1099-R and continue through the interview questions, until you reach Enter Prior Year Roth IRA Contributions. Here, enter $6,500

Here's how to enter the 2024 $7,000 contribution in TurboTax Online:

1. Navigate to Federal > Deductions & Credits > Retirement and Investments>  Traditional IRA and Roth IRA > Revisit
2. Continue through interview again, when you are asked Is This a Repayment of a Retirement Distribution? screen, select No.
3. On the Tell Us How Much You Contributed screen, enter $7,000 and select Continue.
4. On the Did You Change Your Mind? screen, select No, then answer the questions on the following screens.
5. Since none of your contributions can be deducted, you won't see the option to make part of it nondeductible. Instead, you will see the message Income Too High To Deduct an IRA Contribution, and the full amount of your contribution will automatically be nondeductible.

Here are the full instructions to report a Backdoor Roth: How do I enter a backdoor Roth IRA conversion?