TurboTax is behaving correctly. Except in the case where the Form 1099-R is reporting a return of contribution after the due date of the tax return, the instructions for Form 1099-R require that box 2a of a Form 1099-R with code 1, 2 or 7 in box 7 and the IRA/SEP/SIMPLE have box 2a equal to box 1, so TurboTax properly uses the amount in box 1 to avoid problems with a Form 1099-R where the form has a different amount in box 2a.
You must enter the Form 1099-R as received. If the taxable amount is less than the amount in box 1 due to having basis in nondeductible traditional IRA contributions, the taxable amount is determined on Form 8606, not on the Form 1099-R. Be sure to click the Continue button on the page that lists the Forms 1099-R that you have entered and answer any additional questions that TurboTax presents regarding your basis and year-end value in traditional IRAs.
