Your tax liability goes up because you had some positive tax basis in your IRA from prior years, and when you enter the value of your IRA as of prior year, form 8606 does a calculation to determine what portion of the current year's distribution/ conversion is non taxable. Before you enter the prior year end value, turbotax is assuming that you the entire amount is non taxable. After you enter it, turbotax accurately calculates the non taxable portion.
