Traditional IRA cash out

[tsargent1]

We cashed out a Traditional IRA this year. The amount invested was $10,000 post tax, filed form 8606, interest of $976. I am over 65 and Turbo Tax is saying I owe taxes on the full amount. I should only owe on the interest amount as I paid taxes on the original investment. Plus, it appears to be charging a 30% penalty. Help!

[DavidD66]

After you enter you Form 1099-R, you will be on the "Review your 1099-R info".  Make sure you click on "Continue" from there.  There will be a series of questions.  One of those questions will be "Any Nondeductible Contributions to Your IRA".  You need to answer Yes  so you can enter your $10,000 of after tax contributions.  On the next page you will enter $10,000.  Continue through the questions.  Your IRA distributions should now show only the $986 gain as taxable income.