Retirement tax questions

It depends. The software treats each spouse’s IRA profile completely independently, and it sounds like a single "Yes/No" click in the interview has caused the software to "lose" your husband's basis while "creating" a new one for you.

Here is why your husband's Form 8606 is behaving differently and how to fix it.

1. Fix the Contribution (Line 1)

1. Go to Deductions & Credits > Retirement and Investments > Traditional and Roth IRA Contributions.
2. Navigate to your Husband’s entry.
3. If you have an amount entered for a 2025 Traditional IRA Contribution, and that contribution was actually made in 2024 for the 2024 tax year, delete it here. (Line 1 should only have an amount if he physically put money into the account for the 2025 tax year).

2. Step 2: Fix the Basis (Line 2)

1. Continue through the IRA interview until you see the screen: "Any Nondeductible Contributions to your IRA?" (This refers to years prior to 2025).
2. Select Yes for your husband.
3. On the next screen, enter $8,000 as the total basis as of December 31, 2024. This will force the $8,000 onto Line 2.

3. Step 3: The 1099-R (The Conversion)

1. Go to Wages & Income > IRA, 401(k), Pension Plan Withdrawals (1099-R).
2. Ensure his 1099-R is entered correctly. When asked what he did with the money, ensure "I converted some or all of it to a Roth IRA" is selected.
3.  It will ask for the "Value of all Traditional IRAs on Dec 31, 2025." * For your husband, enter that "residual interest" amount (e.g., $5.00).

This triggers the Pro-Rata Rule, which will make that small amount of interest taxable, just like yours.