Until you enter the year-end basis, TurboTax assumes a year-end value of zero when preparing your wife's Form 8606 Part I to calculate the taxable amount of her IRA distributions. Because the taxable amount of an IRA distribution and the amount of basis that remains in the traditional IRAs depends on the ratio of basis to overall balance plus distributions, using a value of zero on line 6 of Form 8606 results in an incorrect, low taxable amount being calculated. Once the year-end value is entered, TurboTax recalculates to obtain the correct, higher taxable amount of the distributions.
TurboTax's refund/balance due display is useless until your tax return is complete. Intermediate results are essentially meaningless.
