I am a regular, long term user of Quicken and Turbotax, and an accountant by profession, though not a Tax Accountant.
For several years, my wife has contributed $6,000 via regular deposits throughout the year to a traditional IRA. No Roth contributions, no re-characterizations, just a straight forward contribution, with the attendant deduction on a MFJ return. No excess, no 8606.
In 2019, a distribution was taken, with 10% taxes withheld, all properly reflected on her 1099-R. In 2019 the regular deposits totaling $6,000 also continued. As a result, I have answered "YES" to the question, "Is This a Repayment of a Retirement Distribution?" and "NO" to the Military Reservist question. Distribution and Deposits are same year to the same IRA account.
The IRA section "Interview" does not ask for the 2019 ending balance, just the contribution amount. Further research leads me to think that Turbotax should "probably" have the 2019 ending IRA value. This value is contributions AND earnings, with no segmentation between the two. Where BASIS is requested from 2018 on the Taxable IRA Distribution Worksheet, no value is entered, because without prior to 2019 excess or non-deductible amounts, BASIS on this form is 0. The 2019 ending IRA value I supplied for line 4 of this same worksheet is the first time Turbotax has had that information.
This year, MFS appears to be the best filing approach. Because of the $10,000 income limitation, the $6,000 contribution is not deductible. This then creates a 8606, but also calculates taxability on the distribution (expected) that impacts the $6k contribution (unexpected), generating a basis against the $6k contribution amount for 2019 on the 8606. Is this correct?
As others have noted, under different scenarios, my tax liability jumps when I add the IRA value for EOY 2019. I provided it outside the interview process. Is that also correct, when all transactions are within the same year, to and from the same Traditional IRA?
