The 1099-R box 1 reflects the contribution plus any earnings.
When entering the recharacterization in the 2016 IRA contributions interview the amount that is recharacterized is the actual amount of the Roth contribution, not including any earnings.
The IRA custodian moves the earnings along with the contribution. Your explanation statement should have said $xxxx Roth contribution recharactorized to Traditional IRA and $xxx earnings moved.
If the explanation did not say anything about earnings, don't worry about it as long as you did not include the earnings in the recharactorization.
The amount recharactorized (the amount of Roth contribution) would either become a 2016 deductible Traditional IRA contribution or a non-deductible 2016 contribution reported as a basis on line 14 on a 8606 form that will carry forward to lower the taxable amount for future distributions. The earnings were not contributions so they are simply moved to the Traditional IRA and are not part of the recharacterization.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
