IRS form 8606, line 10 calculates fraction based on Total IRA contribution for the tax year PLUS basis in traditional IRA as of end of the previous year MINUS IRA contribution for the tax year made from January 1st till April 15th of the following year.
While, the Worksheet 1-1 (Figuring the Taxable Part of Your IRA Distribution) from IRS publication 590-B, line 7 (https://www.irs.gov/pub/irs-pdf/p590b.pdf, on page 15), calculates the same fraction based only on Total IRA contribution for the tax year PLUS basis in traditional IRA as of end of the previous year. (it does not subtract IRA contribution for the tax year made from January 1st till April 15th of the following year).
Which calculations are correct? If I made, IRA contribution for the tax year between January 1st and April 15th of the following year, then worksheet would produce higher taxes than form 8606. TurboTax seems to be using the worksheet calculation. I think the form 8606 calculations are correct - if I made part of IRA contributions between January 1st and April 15th, then how could I have used those contributions in distribution from IRA in the tax year?
Am I missing something or not understanding it correctly?
