Retirement tax questions

Generally, you will enter the recharacterization when you enter the Roth IRA contribution and select you recharacterized it. Then TurboTax will add an explanation statement. It seems you entered recharacterization correctly on your 2024 return and made it nondeductible since you had the 2024 Form 8606 with the 7,000 basis on line 14.

The gain in the Roth IRA before the recharacterization is deemed to have been made in the Traditional IRA since you recharacterized the contribution.

You can ignore the 2025 Form 1099-R with code R since it belongs on the 2024 return but won’t change anything in your 2024 return.

On your 2025 return you will enter the nondeductible contribution to the traditional 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 “Traditional IRA”
5. Enter the $7,000 contribution amount 
6. On the screen "You have deductible traditional IRA contributions of $XXX" enter $7,000 as the amount you want to make nondeductible (If you have a retirement plan at work and are over the income limit it will be nondeductible automatically)

To enter the Form 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" screen and choose “I converted some or all of it to a Roth IRA”
5. On the "Review your 1099-R summary" screen click "Continue"
6. Answer "Yes" to "Did you have any nondeductible IRA contributions to your traditional IRA from 2024 or prior years?" if you had any nondeductible contributions in prior years.
7. Answer the questions about the $7,000 basis from line 14 of your 2024 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs ($0.66 rounded up $1 assuming this was your only IRA).

 Part of your conversion will be taxable on line 4b of Form 1040 since you had a gain.

@ales01