Form 8606 reports nondeductible contributions to traditional IRAs, distributions from traditional IRAs when you have basis, conversions to Roth IRAs and Roth IRA distributions. Not filing it when required to report a nondeductible contribution costs a $50 penalty, and overstating nondeductible contributions costs $100, each unless you show reasonable cause (IRS).
At a glance
Key Facts
Part I
Nondeductible contributions and traditional IRA distributions
Part II
Roth conversions
Part III
Roth IRA distributions
Penalties
$50 for not filing; $100 for overstating
Introduction
Form 8606 is short, but it carries a long memory: it is the record of the after-tax money in your IRAs. Skip it and you can end up paying tax twice on the same dollars, or face penalties.
This guide explains each part of the form, why basis matters, the two penalties, and an illustrative example. It uses the 2025 form and instructions, the latest published; our backdoor Roth IRA guide covers the strategy that most often needs it.
Section 01
What Form 8606 Reports
Part
What it covers
Part I
Nondeductible contributions to traditional IRAs and distributions from traditional IRAs
Part II
Conversions from traditional IRAs to Roth IRAs
Part III
Distributions from Roth IRAs
Use Form 8606 to report nondeductible contributions you made to traditional IRAs; distributions from traditional IRAs, if you have a basis in these IRAs; conversions from traditional IRAs to Roth IRAs; and distributions from Roth IRAs. Part I is completed only if one or more of the listed situations applies, Part II if you converted part or all of your traditional IRAs to a Roth IRA, and Part III only if you took a distribution from a Roth IRA. This guide uses the 2025 form, the latest published.
Section 02
Why Basis Tracking Matters
A nondeductible contribution gives you "basis" in your traditional IRA: after-tax money that should not be taxed again. Form 8606 is the record of that basis. Without it, there is nothing to show the IRS that part of a later withdrawal or conversion was already taxed, and you risk paying tax twice. If you plan a backdoor Roth conversion, Form 8606 is the form that reports it; see our backdoor Roth IRA guide and Roth conversion ladder guide.
Section 03
Penalties
Mistake
Penalty
Required to file Form 8606 for a nondeductible contribution but do not
$50, unless you show reasonable cause
Overstating your nondeductible contributions
$100, unless you show reasonable cause
Section 04
Worked Example (Illustration Only)
Suppose you make a $6,000 nondeductible contribution to a traditional IRA and the IRA holds nothing else. You file Form 8606 Part I to record $6,000 of basis. If you then convert the $6,000 to a Roth IRA, Part II reports the conversion, and because the entire amount is basis, none of it is taxable in this simplified case. If you already hold other pre-tax IRA money, the taxable share of a conversion is figured on the form's lines, so follow the form instructions. The amounts here are illustrative, not the contribution limit.
Section 05
Next Year's Form (2026 Draft)
The IRS has posted a draft 2026 Form 8606 and draft 2026 instructions. A draft is not final and cannot be filed, so this guide relies on the final 2025 form for returns filed now. In the draft instructions the same two penalties ($50 and $100) appear. Check IRS.gov/Form8606 for the final version.
Yes: Form 8606 is attached to your federal income tax return (Form 1040, 1040-SR or 1040-NR) when you make a nondeductible traditional IRA contribution, receive certain distributions, convert to a Roth IRA, or take a Roth IRA distribution. If you are not required to file an income tax return but are required to file Form 8606, you sign it and send it to the IRS on its own.
Q
How do I know if my traditional IRA contribution is deductible or nondeductible?
That depends on your situation and income; the IRA deduction rules are in IRS Publication 590-A. If you contribute without deducting it, the contribution is nondeductible and is reported on Form 8606.
Q
What is the penalty for not filing Form 8606?
$50 for failing to file it when required to report a nondeductible contribution to a traditional IRA, unless you can show reasonable cause. Overstating nondeductible contributions carries a $100 penalty, also unless you can show reasonable cause.
Q
What does Form 8606 do for a Roth conversion?
Part II reports conversions from traditional IRAs to Roth IRAs and figures the taxable amount.
Q
Is Form 8606 needed for a backdoor Roth?
Yes. A backdoor Roth involves a nondeductible traditional IRA contribution and a conversion, both reported on Form 8606.
Q
What is basis in an IRA?
Your after-tax contributions that should not be taxed again when distributed or converted. Form 8606 tracks it.
Q
Which parts apply to Roth IRA distributions?
Part III covers distributions from Roth IRAs. Complete it only if you took a distribution from a Roth IRA that year.
Disclaimer:This guide gives general tax information for educational purposes and is not tax, legal or financial advice. Rules, forms and deadlines are set by the IRS and Congress and can change; check the official sources linked here and talk to a qualified tax professional about your own situation.