Fill with joint compound any large gaps where the drywall meets the flange. Push in enough to make the surfaces flush but not so much the joint compound oozes out. Allow the compound time to turn white, indicating it is dry, which typically takes no more than 24 hours.
Apply a band of joint compound roughly 6 inches wide to the drywall edges that meet the flange, using a 6-inch drywall knife.
Lay paper drywall tape over the bands of compound so that it butts up against the flange. The area underneath the tape should be entirely covered by joint compound to ensure proper adhesion.
Wipe the tape flat with the 6-inch drywall knife. Work slowly to avoid scratching the bathtub flange.
Apply a coat of joint compound over the installed tape after it dries. Hide the tape, but don’t apply so much joint compound that the surface becomes pitted or wavy. Allow the compound to dry fully before performing another coat, using the same method.
Sand your work with 150-grit sandpaper after the compound dries. Don’t scratch the bathtub flange.
Apply a narrow bead of silicone caulk where the drywall edges meet the flange. Use the tip of your finger to smooth the caulk so it is consistent and even. The silicone caulk provides a watertight seal.