Tell Us Value of your Traditional IRA

[Davidw4]

When I enter the value of my traditional IRA on Dec 31, 2022, my tax increases dramatically.  My RMD was fully taken and tax was withheld.  Is TurboTax double calculating the tax somehow?

[DanaB27]

Did you have pre-tax and after-tax funds in your traditional IRA? If yes, TurboTax uses the value to calculate the taxable part according to the pro-rata rule.  Therefore, the tax might change but you won't be double-taxed.

Please make sure that you indicate that you took all of your RMD when TurboTax asks.

[Davidw4]

Thank you, DanaB27.  I have kept my non deductible IRA contributions in a separate account, but added the 2022 year end value of that to my traditional IRA. 
I think there may be no problem after all. I think up to entering that year end value, TurboTax assumes the value of my IRAs is 0, and therefore calculates 0 tax due on the RMD even though the 1099Rs indicate how much RMD was taken and how much tax was withheld. If I’m right, the rude awakening is upon entering the year end value from my 5498s which causes TurboTax to then calculate the RMD and the tax owed on it.  Does this make sense?

[DanaB27]

Yes,  as far as the IRS is concerned all traditional/SEP/SIMPLE IRAs are one account even if you have multiple accounts.

Yes, that is correct before entering the value TurboTax assumed the value is $0, once you entered the value TurboTax was able to calculate the correct taxable amount according to the pro-rata rule. Generally, it is best to ignore the refund amount until everything is entered.

[Critter-3 · Accepted solution]

Correct ... the Refund-O-Meter shows the bottom line as you go but as you make more data entries the bottom line keeps changing ... the meter is only true at the end of the interview when all is said and done so ignoring the inaccurate figures as you go along is the best thing to do.  Personally I think it should be inactive at least until all of the income section has been completed.