topic Form 8606 Nondeductible IRA Entry Increases My Taxes Owed in Retirement tax questions

Form 8606 Nondeductible IRA Entry Increases My Taxes Owed

Psucsmc — Tue, 24 Feb 2026 22:18:01 GMT

This is my first year taking RMD's. I have a $13,770 basis documented on my last Form 8606 for nondeductible IRA contributions I made through 2007.

After I enter this into TT, I'm then asked to list my total 2025 EOY amount for all IRA's.

This is a significant amount...

After I make these entries my tax goes UP not DOWN by several thousand dollars.

Since I already paid taxes on $13,770 shouldn't that DECREASE my tax bill?

What am I missing/doing wrong?

Re: Form 8606 Nondeductible IRA Entry Increases My Taxes Owed

fanfare — Tue, 24 Feb 2026 22:34:55 GMT

"What am I missing/doing wrong?"

Print and review Form 8606 to discern the calculation.

@Psucsmc

Re: Form 8606 Nondeductible IRA Entry Increases My Taxes Owed

ThomasM125 — Tue, 24 Feb 2026 23:07:37 GMT

No, your taxes should not decrease. Distributions from IRA's that have a basis from non-deductible contributions are partially taxed based on the ratio of their basis to the value of all non-Roth IRA accounts. That is why you had to enter the value of your IRA accounts in TurboTax. So, a portion of your distributions are taxed even though you contributed after-tax dollars to the IRA. That is why your tax went up, because you added taxable income.

Re: Form 8606 Nondeductible IRA Entry Increases My Taxes Owed

Psucsmc — Tue, 24 Feb 2026 23:24:16 GMT

Thank you, but I still do not understand. I already paid taxes on 13,770 many years ago and I am simply seeking to avoid paying taxes on them again.

When I entered that relatively small amount my tax bill increased several thousand dollars. That does not make sense.

Is this going to happen in future years?

I truly appreciate your help (and patience).

Re: Form 8606 Nondeductible IRA Entry Increases My Taxes Owed

dmertz — Tue, 24 Feb 2026 23:30:31 GMT

Until you enter the year-end value of your traditional IRAs, TurboTax uses the incorrect value of zero, resulting in TurboTax calculating on Form 8606 that all of your basis applies to the distribution. Once you enter the year-end value, TurboTax recalculates the correct lesser amount of basis that applies to the distribution, properly increasing the amount determined to be taxable.

Re: Form 8606 Nondeductible IRA Entry Increases My Taxes Owed

Psucsmc — Tue, 24 Feb 2026 23:47:42 GMT

Thank you both.
Very helpful.