To fill out Form 8606, you record any new nondeductible traditional IRA contributions and figure the taxable share of distributions in Part I, report Roth conversions in Part II, and work through Roth IRA distributions in Part III, then attach the completed form to your Form 1040 by the regular filing deadline. The form is the only place the IRS tracks the after-tax “basis” in your IRAs, so filing it correctly is what keeps you from paying tax twice on the same money.
When You Actually Need This Form
You file Form 8606 for any tax year in which one of four things happens:
- You contributed to a traditional IRA and didn’t deduct the contribution, whether because your income was too high, you were covered by a workplace plan, or you chose not to deduct it.
- You converted money from a traditional, SEP, or SIMPLE IRA into a Roth IRA.
- You took a distribution from a traditional IRA and you have basis from nondeductible contributions in any prior year, even if this year’s withdrawal was small.
- You received a distribution from a Roth IRA and need to determine whether it’s tax-free.
You don’t need the form if every traditional IRA contribution you’ve ever made was fully deductible and you’ve done no conversions or Roth distributions. Employer plans like 401(k)s and 403(b)s stay out of the picture entirely; the pro-rata calculation only pools IRAs.
Gather These Numbers First
Before you open the form, pull together:
- Your total basis from prior years. Line 14 of your most recent Form 8606 carries this figure. If you’ve never filed one, your prior basis is zero.
- This year’s nondeductible contribution amount. The 2025 contribution limit is $7,000, or $8,000 if you’re 50 or older. For 2026 the limits rise to $7,500 and $8,600.
- The December 31 fair market value of every traditional, SEP, and SIMPLE IRA you own. Your custodian reports each account’s value on Form 5498, sent by the end of January. Add them all together; the IRS treats them as one bucket.
- Your Form 1099-R for any distributions or conversions during the year.
Part I: Contributions and Distributions
Part I does two jobs on the same page. It records the nondeductible contributions you made this year, and it runs the pro-rata calculation that determines the tax-free portion of any traditional IRA distribution or conversion. Complete it if you made nondeductible contributions this year, took a distribution from a traditional IRA that has basis, or converted only part of your traditional IRAs to a Roth.
Lines 1 through 5 build your basis. Line 1 is this year’s nondeductible contributions. Line 2 is your cumulative basis from prior years, pulled from Line 14 of your last Form 8606 (the instructions include a Total Basis Chart to guide you). Line 3 adds them. Line 4 captures any contributions you made between January 1 and April 15 of the following year that you designated for the current tax year. Line 5 is the subtraction that produces your working basis.
Lines 6 through 14 handle the pro-rata math, which is the heart of the form. You don’t get to pick which dollars come out of your IRA. Every distribution is treated as a proportional mix of taxable and nontaxable money based on the ratio of your basis to the total value of all your traditional IRAs.
Line 6 asks for the December 31 value of all your traditional IRAs plus any outstanding rollovers. Lines 7 and 8 capture distributions and conversion amounts. The form then divides your basis (Line 5) by the combined total of your account values, distributions, and conversions (Line 9) to produce a decimal on Line 10. That decimal is your nontaxable percentage. It gets multiplied against your distributions and conversions to determine the tax-free portion. Line 14 carries your remaining basis into future years, which is the figure you’ll need next year.
Part II: Roth Conversions
Part II applies only if you converted money from a traditional, SEP, or SIMPLE IRA into a Roth IRA during the year. It’s three lines that lean directly on the Part I work.
Line 16 is the total amount you converted. Line 17 is the nontaxable portion of that conversion, which flows over from Part I. Line 18 is the difference, which is the taxable share of the conversion. That figure gets reported as income on your Form 1040.
Conversions done in 2018 or later cannot be undone, so whatever Line 18 shows is final for the year.
Part III: Roth IRA Distributions
Part III applies when you actually took money out of a Roth IRA during the year. Rollovers between Roth accounts, qualified charitable distributions, and recharacterizations don’t count as distributions for this purpose.
A Roth distribution is “qualified” and fully tax-free if you’ve had any Roth IRA for at least five tax years and you’re at least 59½, disabled, or using up to $10,000 for a first home purchase. If your distribution is qualified, Part III is short: report the amount and it’s excluded from income.
If it’s not qualified, Part III walks you through the ordering rules. Roth withdrawals come first from your regular contributions, which are always tax-free because you already paid tax on them. Next come converted amounts, which are tax-free once the five-year period for that conversion has passed. Earnings come last and are taxable, plus potentially subject to the 10% early withdrawal penalty if you’re under 59½. Line 22 uses your total Roth contribution basis to separate the tax-free return of contributions from taxable earnings.
The Backdoor Roth: Part I and Part II Together
A backdoor Roth (contributing to a nondeductible traditional IRA and then converting it) needs both parts of the form on the same return, which is where much of the confusion around Form 8606 shows up.
Start in Part I. Line 1 is your nondeductible contribution. If this is your first Form 8606, Line 2 is zero. Lines 3 through 5 carry the basis forward. Line 6 is the year-end value of all your traditional IRAs, and this is the number that decides the outcome. If your only traditional IRA money was the contribution you already converted out, Line 6 may be zero or close to it. Line 8 captures the conversion. Lines 10 through 14 then run the pro-rata math and determine the nontaxable share.
In the cleanest scenario, no other traditional IRA balances anywhere, you contribute $7,000 and convert all of it, your basis equals 100% of the pool, and the entire conversion comes through nontaxable except for any earnings between contribution and conversion. Line 18 in Part II shows little or no taxable amount. If you also hold pre-tax IRA money elsewhere, the pro-rata rule spreads your basis across every traditional IRA you own, and a much larger share of the conversion becomes taxable.
Inherited IRAs
If you inherited a traditional IRA that has basis, or you took a non-qualified distribution from an inherited Roth IRA, you file your own Form 8606. Basis doesn’t disappear when the original owner dies; it transfers to the beneficiary, and Form 8606 is how you recover it tax-free.
File a separate Form 8606 for IRAs inherited from each decedent. Two inheritances mean two additional forms, on top of anything you file for your own IRAs. Spouses each file their own form when both have reporting obligations.
For an inherited Roth, the five-year clock that governs qualified distributions runs from the year the original owner first funded any Roth IRA, not the year you inherited. If they held a Roth for at least five tax years before death, beneficiary distributions of both contributions and earnings come out tax-free. If not, earnings are taxable, and Part III sorts the numbers.
How and When to File
In most cases you attach Form 8606 to your annual return (Form 1040, 1040-SR, or 1040-NR) and file everything together. The deadline matches your regular return: April 15 of the following year, or later if you file an extension. You can download the form at IRS.gov.
If your income is low enough that you’re not otherwise required to file a return, you still need to file Form 8606 on its own to keep your basis on record. Sign and date page 2, put your address on page 1, and mail it to the same IRS service center where you would file a Form 1040.
One timing detail matters. Contributions made between January 1 and April 15 of the following year can be designated for the prior tax year. A $7,000 contribution made in February 2026 and designated as a 2025 contribution belongs on your 2025 Form 8606, Line 1. The form itself flags this on Line 4.
Fixing a Missed Prior-Year Filing
If you made nondeductible contributions in past years but never filed Form 8606, your basis still exists, it just isn’t documented. Without documentation, the IRS has no way to know some of your IRA money was already taxed, and you risk paying tax on it again at withdrawal.
You can file Form 8606 retroactively for any past year using the version of the form for that year, available in the IRS’s prior-year products archive. Include a short statement explaining why the form is late. If you also need to correct a return you already filed (for example, you reported a distribution as fully taxable when part of it wasn’t), file Form 1040-X with the corrected Form 8606 attached.
A $50 late-filing penalty applies to each missed form, but a waiver is available for reasonable cause. Gather what you can to reconstruct basis: account statements, Forms 5498 from your custodian, bank records of contributions, and prior tax returns. Filing late is better than never filing; the alternative is losing the basis and paying tax on money that was never deductible in the first place.
Penalties
Two penalties sit under 26 U.S.C. § 6693. A $50 penalty applies each time you were required to file the form and didn’t, even if no tax was owed on the underlying transaction. A separate $100 penalty applies if you overstate your nondeductible contributions to inflate your basis.
Both can be waived for reasonable cause, which generally means a good-faith effort to comply and a failure that wasn’t neglect. Honest misunderstanding of the filing requirement, an error by a tax professional you relied on, or serious illness during the filing period can qualify. The burden is on you to document the circumstances.
The bigger cost usually isn’t the penalty. Without Form 8606 on record, the IRS treats your entire IRA balance as pre-tax money, so every distribution becomes fully taxable. Over a lifetime of nondeductible contributions, that can mean thousands of dollars in tax on withdrawals that should have been tax-free.
Keep the Records Permanently
Keep copies of every Form 8606 you file, along with your Forms 5498 and 1099-R, until you’ve taken every dollar out of all your IRAs, including Roth IRAs. The IRS instructions say to retain these records “until all distributions are made.” There is no three-year or seven-year window. A first nondeductible contribution at age 30 and a final withdrawal at age 80 means holding the records for 50 years. Treat them as permanent files.