Here is my timeline on IRA (post tax) contributions:
2022: contributed 725, basis 725
2023: contributed 1675, basis 2400
2024: contributed 2800, basis 5200
2025: contributed 3700, basis 8900.
TurboTax identifying a taxable amount of 2400.
When TurboTax asks my total basis at the end of 2024 I entered 5200.
Why am I getting 2400 as taxable and how can I fix it? Is it possible it’s only “seeing” 2024 and 2025 basis?
Distributions are a proportionate mix of basis and pre-tax amounts. If less than your entire basis is being applied when determining the taxable amount, it implies that you did not have a zero balance in traditional IRAs at the end of 2025.
Knowing that the taxable amount is $2,400 says nothing about the amount of the distribution, the amount of the year-end balance, or the amount of basis being applied to the distribution. You can view the calculation of the taxable amounts on Form 8606 Part I and if TurboTax puts asterisks on lines 13 and 15, on the Taxable IRA Distribution Worksheet.
I did not have any distributions and the balance of the traditional IRA was $0 at the end of the year. I utilize the backdoor method and didn’t have any investment gains in the traditional IRA account. From my understanding, I shouldn’t have any taxable amount this year.