Traditional IRA

[bguddeck]

I used part of my Traditional IRA. Received my 1099R which had Federal Income tax withheld as I requested. Then while answering the questions using Turbo Tax it asked the value of my Traditional IRA at which time Federal Refund Reduced a very significant amount. Is going to happen each year until the Traditional IRA is gone or is this a time entry or did I do something wrong. Seems I am being taxed twice on this with the amount withheld plus on the value of the IRA.

[Cynthiad66]

TurboTax is asking for the value of the IRA for tracking purposes.  It will follow every year what is going on with the IRA.  It can also inform you of Excess contributions in the future. 

TurboTax asks for the value of your IRA in anticipation of needing to prepare Form 8606 if Form 8606 is required to be included with your tax return.

You will not be taxed double for that question.  Only the amount of distribution will be taxed

[bguddeck]

That is what I was expecting no change to my refund. However, when I put the value of the IRA at the end of last year my refund drops a very Significant amount that is my basic question why does did reduce so much. If I don't input the value it goes back up.

[ThomasM125]

TurboTax can use the value of your IRA at end of the year to determine if your distribution was taxable, based on the beginning value and distributions taken and contributions made during the year.

To make sure the correct amount is being shown as taxable on your form 1040, you can view the form 1040 and you will see the taxable amount of your IRA distribution on line 4(b) as follows:

While working on your return in the Federal section of TurboTax:

   1.  Choose the Tax Tools icon on your left menu bar

   2.  Tools

   3.  View Tax Summary

   4.  Choose the Preview my 1040 on your left menu bar