b1430048, how is it that your contribution to the traditional IRA was an excess contribution?
Regardless, this is a messy situation to correct. I assume that this was all done in 2018. The excess that was in the traditional IRA was not eligible to be converted to Roth, so converting this excess to Roth results in an excess contribution to the Roth IRA. In the past one was permitted to recharacterize back to a traditional IRA and then obtain a return of the excess contribution from the traditional IRA. However, recharacterizations of Roth conversions are no longer permitted.
I haven't seen any recent guidance from the IRS on how to handle this situation. Since a Roth conversion consists of a distribution from the traditional IRA and a rollover to a Roth IRA, I would treat the distribution from the traditional IRA as a return of contribution by indicating to TurboTax in the Deductions and Credits section that you had the traditional IRA contribution returned. I would then enter a substitute Form 1099-R with code 8 (and code 1 if you are under age 59½) instead of entering the code 2 or 7 Form 1099-R that you received for the conversion distribution from the traditional IRA. I would then enter the conversion amount as a regular Roth IRA contribution, telling TurboTax that you have an excess contribution to the Roth IRA.
If you requested a filing extension by the April 15 deadline or timely filed your 2018 tax return, you can request a return of excess contribution from the Roth IRA before the due date of your 2018 tax return to eliminate the excess in the Roth IRA and avoid any excess contribution penalty. It will take some convincing of the Roth IRA custodian that this actually constituted a regular contribution to the Roth IRA because it was a conversion of an amount not eligible to be converted. If you obtain a return of this contribution before the due date of your tax return, you'll tell TurboTax that you had the regular Roth IRA contribution returned. You'll then need to enter the code JP 2019 Form 1099-R if the amount returned had gained in value and therefore had attributable earnings distributed. For all of this you'll need to provide explanation to the IRS on the explanation statement(s) that TurboTax prompts you to prepare.
