Correct, but the Form 8606 has two purposes: (1) to keep the calculated basis in your IRA up to date when you make non-deductible contributions, and (2) to calculate the taxable portion of a distribution and recalculate the basis when you later take a distribution from the IRA to which you made non-deductible contributions sometime in the past.
Thus, you don't need to make an IRA contribution in the most recent tax year to still need the Form 8606. You just have to take a distribution from an IRA to which you made non-deductible contributions sometime in the past. That is our situation. Since we retired, we have not been making contributions to our IRA, but we have been taking distributions from a regular IRA to which we made past non-deductible contributions. In that case, we still need to file the Form 8606. Otherwise, (1) we are taxed on the full amount of the distribution, which is not correct, and (2) the basis in the IRA is not recalculated, which messes up tax calculations for distributions in subsequent years. And TurboTax can't prepare the Form 8606 correctly unless it asks for the end of year fair market value and the most recent calculated basis of the IRA.
This year, when filing our 2021 return, TurboTax should have asked us if we had ever made non-deductible contributions when we entered the 1099-R (or at least somewhere in the process flow) and then gone on to ask for fair market value and the basis, but it didn't and it didn't generate a Form 8606. It always has in the past. In working with TurboTax Customer Service, we were finally able to get TurboTax to prompt for the basis, but never could get it to ask for the end of year fair market value. At that point, TurboTax finally did generate the Form 8606, but Line 6, where end of year fair market value should be, was blank. Thus, its calculations of both the taxable portion of the distribution and the updated basis were incorrect. What's worse, TurboTax pronounced everything accurate when it did its final check of the return even though the Form 8606 was missing a critical piece of information.
