Withdrawals from IRAs can be complicated when nondeductible amounts are included.
The biggest issue is that you cannot pick and choose what you withdraw from an IRA. For example, if you have $100,000 in various IRAs of which $10,000 was nondeductible contributions, you cannot just withdraw the $10,000 tax-free.
Instead, you must withdraw amounts proportionally. In this case, 10% of your IRA dollars were non-deductible. So if you withdraw $10,000, then 90% of it is taxable dollars and only 10% ($1,000) is nontaxable dollars.
Even more surprising, your IRAs are all collected together into a "virtual IRA" for this calculation. That is, you add all the totals in the IRAs and the amounts of the nondeductible contributions in the IRAs to make the total of the virtual IRA, as if you were withdrawing from a single super IRA.
After you enter your 1099-R and after TurboTax asks all sorts of questions about Disaster Distributions and all sorts of things, TurboTax will finally ask you "Any Nondeductible Contributions to [name]'s IRA?". Check YES.
The next screens will ask you things to to try to figure out what your basis is in your virtual IRA, so that it can calculate what your taxable distribution is.
And, yes, when you made nondeductible contributions, you need to complete a 8606 to track them.
Make sense?
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