Last March when doing my 2023 taxes I realized an unanticipated income jump had disqualified me from keeping my regular ROTH IRA contributions. Vanguard helped me through this and I recharacterized the $6,500 in Roth contributions to a non-deductible IRA. I then converted this amount ($7,800 in total -- my $6,500 ROTH contributions plus gains from the year) to my Roth IRA.
Last year I filed Form 8606 through Turbotax saying I had contributed $6,500 to a non-deductible IRA.
This year I received two 1099-Rs from Vanguard. One for the Roth and one for the traditional. I am pretty sure I need to pay taxes on the $1,300 in gains from the recharacterization last March since that money was earned from the already-taxed $6,500 contribution.
When I entered the two 1099-Rs into Turbotax for tax year 2024 it reduced my return quite a bit. I think I need to mention the basis of $6,500 on the $7,800 that was recharacterized so I am only taxed on the gain and not the entire $7,800 since I've already paid taxes on $6,500 of it.
Could you confirm this is the way or is there anything else I need to do?
