You mention the pro-rata rule. My guess is that your wife made $7,000 nondeductible traditional IRA contribution for 2025, so the $1,030.61 distribution became subject to the pro-rata rule. In that case the result would be a taxable amount of $1,030.61 * 1,030.61 / ($7,000 + $1,030.61) = $132. The penalty is therefore 10% of $132 or $13. That agrees with TurboTax's result.
I don't understand why your wife would not have just converted the $1,030.61 to Roth. That would have avoided the early-distribution penalty entirely and you would have $1,030.61 more in the Roth IRA for the same amount of taxable income.
