To cause TurboTax to ask you to prepare the required explanation statement for the recharacterization, you must enter the original $7,950 Roth IRA contribution, tell TurboTax that you "switched" $7,000 to be a traditional IRA contribution instead, then provide the explanation that you recharacterized $7,000 of the original $7,950 contribution, resulting in a loss-adjusted amount of $6,896 to be transferred to the traditional IRA. TurboTax will then show on your tax return the resulting $7,000 traditional IRA contribution. If nondeductible, it will appear on 2024 Form 8606 Part I to add to your basis in nondeductible traditional IRA contributions.
Because the Roth conversion occurred in 2025, nothing about the Roth conversion will appear on your 2024 tax return. It will be reportable on your 2025 Form 8606.
Regarding the error flagged by TurboTax, you told TurboTax that you recharacterized $7,000 of the $7,950 original Roth IRA contribution, leaving $950 as a Roth IRA contribution. I think you then told TurboTax that you received a return of $6,896 of your Roth IRA contribution, which is not what you did. After recharacterizing $7,000 of the original $7,950 Roth IRA contribution, only $950 of the original Roth IRA contribution remained.
