Here is what I am doing:
Under Income, -->IRA, 401(k), Pension Plan Withdrawals (1099-R), I uploaded the 1099-R that I received. In the 1099-R, Box 1 (Gross Distribution) shows $7,000 and Box 2a (Taxable Amount) shows $7,000. In Box 7 (Distribution Code/s) is '2' and the checkbox below IRA/SEP/SIMPLE is checked. All other boxes are blank.
Followup questions:
1. Have you ever taken a disaster distribution before 2025?
(This includes repayments of prior year disaster distributions in 2025).
My answer is 'No'.
2. Did you make any nondeductible IRA contributions to your traditional IRA from 2024 or prior years?
(Note: Nondeductible contributions are tracked on Form 8606 in your prior year returns.).
My answer s 'No'.
3. Your Traditional IRAs-Enter the total value of all of your traditional IRA, SEP, and SIMPLE IRA accounts on December 31, 2025. This information is sent by mail on Form 5498. Do not include Roth IRAs.
Value of your traditional, SEP, and SIMPLE IRAs on December 31, 2025. My answer is '0' (since money was moved to Roth by that day).
Outstanding rollovers-My answer is '0'.
Outstanding recharacterizations-My answer is '0'.
Then I am directed to 'Your wages and income'. Here I see $7,000 under 'IRA, 401(k), Pension Plan Withdrawals (1099-R)'.
Under 'Tell us about your IRAs', I selected checkbox in front of 'Traditional IRA' and not in front of 'Roth IRA'. Clicked 'Continue'.
Q.1 Your Work retirement plans. Are you covered by a retirement plan at work? My answer is 'No'.
Q.2 Is this a repayment of a retirement distribution you received? My answer is 'No'.
Q.3 Enter the total amount contributed to a traditional IRA for 2025, even if some or all was later transferred to a Roth IRA. Learn more your total 2025 traditional IRA contributions. (Note: Don't enter Roth contributions or rollovers here, even if Shruti later recharacterized to a traditional IRA. )
Your total 2025 traditional IRA contributions. My answer is '$ 7,000'.
Amount of these regular contributions for 2025 you contributed between January 1, 2026 and April 15, 2026. My answer is '0'.
Q.4 Enter Shruti's amount switched from traditional IRA contribution to Roth IRA contribution. (Note: Don't include losses or any interest you earned.) My answer is '$ 7,000'.
Q. 5 Enter your recharacterization information. Original contribution date-My answer is '12/22/2025'
Recharacterization date. My answer is '12/31/2025'.
Recharacterization reason. My answer was 'Income eligibility change'.
Amount transferred (after earnings and losses). My answer is '$7,000'
Q.6 Did you contribute more money to this IRA than was allowed in 2024 or any previous year?
My answer is 'No'.
Q.7 Did you make any nondeductible IRA contributions to your traditional IRA from 2024 or prior years? (Note: Nondeductible contributions are tracked on Form 8606 in your prior year returns.). My answer is 'No'.
Then I get redirected to see 'Based on what you've entered you don't qualify for an IRA deduction.'
No 8606 is generated and $7,000 is still showing up as my taxable income.
