I received an ira payout of 28000.41 I paid the tax of 3202.08 when the money came out of the ira. So why does turbo tax add the 28000.00 to my taxable income?

[dmertz]

A tax return is like a balance sheet.  The tax increase attributable to the $28,000.41 distribution is not determined until the distribution is combined with all of the other information on your tax return.  The $3,202.08 is simply a prepayment toward the overall tax liability determined on your tax return, just like tax withholding from a W-2.  The $3,202.08 appears on your tax return as a credit on line 17 to be subtracted from your overall tax liability, so you aren't paying this amount twice.

[SteamTrain]

Because the taxes withheld are just like W-2 withholding...just a crude estimate of what you may, or may not be taxed on when you enter the income in your tax return.  The tax return is the final accounting.

You put in the income and withholding on your tax return, the income adds to everything else and a tax is calculated on everything...and the withholding you entered with that form gets added to all your other withholding to determine a final tax due...or refund, for everything.

As an example, if the 28,000 was your ONLY income for the entirety of 2019, then the withholding done on it may have been too much, and you would get some of that withholding back...….but if you had a lot of other income in addition to that withdrawal, then the withholding done may not have quite been enough to cover the taxes assessed for taking it out and you'd owe a bit more  (if you other withholding didn't cover it), 

Your tax return is the final tax accounting done for all of 2019