Traditional IRA to backdoor Roth IRA conversion reported as taxable income

You should have reported her nondeductible contribution on your 2023 return and TurboTax should have created a 2023 Form 8606 with a basis on line 14 ($6,500).  This basis will be entered in your 2024 tax return.

To enter the nondeductible contribution to the traditional IRA for 2024  (you should have entered these steps on your 2023 return):

1. Login to your TurboTax Account 
2. Click on "Search" on the top right and type “IRA contributions” 
3. Click on “Jump to IRA contributions"
4. Select “traditional IRA”
5. Answer “No” to “Is This a Repayment of a Retirement Distribution?”
6. Enter the amount you contributed
7. Answer “No” to the recharacterized question on the “Did You Change Your Mind?” screen
8. Answer the next questions until you get to “Any Nondeductible Contributions to Your IRA?” and select “Yes” if you had a nondeductible contribution before this tax year.
9. Enter your basis in the Traditional IRA from your 2023 Form 8606 line 14 (if you had a basis in the prior year)
10. On the “Choose Not to Deduct IRA Contributions” screen choose “Yes, make part of my IRA contribution nondeductible” and enter the amount (if you have a retirement plan at work and are over the income limit it will be nondeductible automatically and you only get a warning and then a screen saying $0 is deductible).

To enter the Form 1099-R conversion: 

1. Click on "Search" on the top right and type “1099-R”  
2. Click on “Jump to 1099-R”
3. Click "Continue" and enter the information from your 1099-R
4. Answer questions until you get to “Tell us if you moved the money through a rollover or conversion” and choose “I converted some or all of it to a Roth IRA”
5. On the "Review your 1099-R info" screen click "Continue"
6. Answer "Yes" to "Any nondeductible Contributions to your IRA?" if you had any nondeductible contributions in prior years.
7. Answer the questions about the basis from line 14 of your 2023 Form 8606 and the value of all traditional, SEP, and SIMPLE IRAs

Please see How do I enter a backdoor Roth IRA conversion? for instructions in TurboTax Desktop.

I had a similar issue, that only arose this year (exact same situation was processed without a hitch in previous years). A simple backdoor Roth conversion, executed in early 2024 - not involving anything from 2023. My 1099-R from Fidelily had a code 2 in box 7, and had the same number in box 2a (taxable amount) as in box 1, with box 2b (taxable amount not determined) checked. Elsewhere in Turbotax, I had established that I had made a non-deductible contribution in the same amount. With this status of the form, there was no way that Turbotax was offsetting the contributions, and showed the full amount of the conversion on 1040 line 4b (as well as on 4a). The 8606 form showed this, but stopped after line 3. Through much trial and error, I found that the only way to fix this was to manually change the box 2a amount to zero (Turbotax would not accept a blank entry). Doing this caused the rest of form 8606 to be populated, and the correct amount to be shown on line 4b. But having to misreport what is actually shown on the 1099R seemed a bit iffy to me. The 1099R was provided in exactly equivalent form for 2023, and Turbotax processed the Roth conversion just fine that time.