why does adding the value of my traditional ira increase my tax dramatically? I am over 70.5 and took the rmd per my bank as required each year. It looks like the answers on the forum say that UNLESS you add the value TT miscalculates. I find the opposite!
If you have any non-deductible "basis" in the IRA that was previously reported on a 8606 form then that can lower the taxable amount. Not entering the total value indicated that you closed the IRA so all the basis is applied to the current distribution instead of pro-rating the basis over the current distribution and the remaining IRA value. Doing that will guarantee an IRA audit letter and a bill for the missing tax.
You can NEVER withdraw ONLY the nondeductible part - it must be prorated over the entire value of ALL Traditional IRA accounts which include SEP and SIMPLE IRA's. (For tax purposes you only have ONE Traditional IRA which can be split between as many different accounts as you want, but for tax purposes they are all added together).
For example using rough figures: if you had $60K of nondeductible contributions in an IRA with a total value of $600K (10:1 ratio), then when you take a $60K distribution from any IRA account $6,000 would be nontaxable and $54,000 would be taxable (same 10:1 ratio) , with the remaining $54K of basis staying in the IRA for future distributions. As long as there is any money in the IRA, there will be some basis.
TurboTax will ask for your non-deductible "basis" and then the *Total Value* of *all* Traditional IRA accounts as of Dec 31, 2017. That is so the prorating of the basis can be properly proportioned between the current years distribution and the remaining IRA value. That is done on the 8606 form.