Before you enter the year-end balance in your traditional IRAs, TurboTax assumes that the balance was zero and calculates on Form 8606 an incorrectly high nontaxable amount for your traditional IRA distribution. Once you enter the correct year-end balance, TurboTax recalculates the nontaxable amount to the lower, correct value, properly increasing the taxable income and the tax liability from what was indicated previously.
