Why am I getting a penalty notice for recharacterizing a roth to a traditional then converting the traditional into a roth? Financial advisor said this shouldn't happen.

[SusanY1]

If you recharacterized a Roth to a Traditional IRA and either took a tax deduction for this contribution or did not track the basis on Form 8606 then the IRS assumes that the conversion from Traditional IRA to Roth IRA step is a deductible/ pre-tax IRA to Roth, and this is always a taxable transaction. 

If you contributed money to a Traditional IRA that was nondeductible, and have no other Traditional IRA accounts (including rollover, SEP and SIMPLE IRAs) then the conversion is tax-free if handled properly. 

It is not clear from the information given if you had a truly taxable transaction with poor advice or simply missed a step when trying to do what is popularly referred to as a "Backdoor Roth" contribution.  

For someone to best assist you in correcting the issue if you were attempting the Backdoor Roth, let us know the following:

• The year that you made the initial contribution to a Roth
• Whether or not the recharacterization to the Traditional IRA resulted in a tax deduction
• The year of the recharacterization
• The year of the conversion to the Roth 
• The amounts of all of the above 
• The balance of any traditional/pre-tax IRA accounts at the end of 2020 (Traditional/Rollover IRAs, SEP-IRAs, SIMPLE-IRAs.)  You do not need to include any balances in 401(k) plans or other similar plans - just IRAs.