Guides
Form 8606: Reporting Nondeductible IRA Contributions
Form 8606 is the IRS form that tracks the after-tax money in your traditional IRAs, called basis, so those dollars are not taxed a second time when you withdraw or convert them. You file it with your Form 1040 for any year you make a nondeductible traditional IRA contribution, convert to a Roth, or take a distribution from an IRA that holds basis. Skip it and you can pay income tax twice on money you already taxed.
What is Form 8606 and who must file it
Form 8606, “Nondeductible IRAs,” reports after-tax IRA activity to the IRS. You must file it for 2025 if you made a nondeductible traditional IRA contribution, converted any traditional, SEP, or SIMPLE IRA to a Roth, took a distribution from a traditional IRA that has basis, or took certain Roth IRA distributions. It attaches to your Form 1040, 1040-SR, or 1040-NR.
The form exists to record and carry forward your basis: the running total of dollars you contributed after tax. Without a filed Form 8606, the IRS has no record that any of your IRA money was already taxed, so distributions default to fully taxable.
Employer SEP and SIMPLE contributions are never nondeductible contributions and do not go on line 1. Only your own after-tax traditional IRA contributions count. You file a separate Form 8606 for yourself and one for a spouse if both have reportable activity, because basis is tracked per person.
Nondeductible traditional IRA contributions and basis
A nondeductible contribution is money you put into a traditional IRA but cannot deduct, usually because your income exceeds the deduction phase-out while you or a spouse is covered by a workplace plan. For 2025 the contribution cap is $7,000, or $8,000 if you are age 50 or older by year end. You report the nondeductible amount on line 1 of Part I.
Basis is the sum of all your nondeductible contributions and any nontaxable rollover amounts, minus nontaxable distributions already taken. Line 2 carries in your prior basis from the last Form 8606 you filed, line 1 adds the current year, and line 14 shows the basis you carry forward to next year.
The traditional IRA deduction phase-out sets the trigger. For 2025, if you are an active participant in a workplace plan, the deduction phases out between $79,000 and $89,000 of modified AGI for single filers, and between $126,000 and $146,000 for married filing jointly. Above the top of the range, the whole contribution is nondeductible and belongs on Form 8606.
Keep every Form 8606 you have ever filed. Basis can sit in an account for decades before you touch it, and reconstructing undocumented basis during an audit is difficult. If you contributed after tax for years but never filed the form, you may have real basis that does not exist on paper, which the IRS will not honor without support.
| Part | Lines | What it reports |
|---|---|---|
| Part I | 1 to 15 | Nondeductible contributions, basis, and the taxable portion of distributions and conversions |
| Part II | 16 to 18 | Amounts converted from traditional, SEP, or SIMPLE IRAs to Roth IRAs |
| Part III | 19 to 25 | Nonqualified distributions taken from Roth IRAs |
The pro-rata rule and how Form 8606 applies it
The pro-rata rule treats every dollar you withdraw or convert from a traditional IRA as a blended mix of pre-tax and after-tax money, in proportion to your total IRA balance. You cannot cherry-pick and convert only the after-tax dollars. Form 8606 lines 6 through 13 run this calculation, so a small basis inside a large pre-tax balance yields a mostly taxable conversion.
The denominator is the combined year-end value of all your traditional, SEP, and SIMPLE IRAs, plus any outstanding rollovers, reported on line 6. It does not include 401(k), 403(b), or 457(b) balances, Roth IRAs, or IRAs you inherited. A spouse’s IRAs are also excluded, since the rule is applied per person.
Worked example: you hold $93,000 of pre-tax money across traditional IRAs and add a $7,000 nondeductible contribution, for $100,000 total. Your basis is 7 percent of the total, so if you convert $7,000, only $490 is tax-free and $6,510 is taxable. The remaining basis prorates across the balance that stays in the account.
To sidestep the rule before a conversion, some taxpayers roll their pre-tax traditional IRA money into an employer 401(k) that accepts rollovers, because 401(k) balances are excluded from the line 6 denominator. That must happen by December 31 of the conversion year, since Form 8606 uses the year-end IRA value, not the balance on the conversion date.
Reporting a backdoor Roth on Form 8606
A backdoor Roth is a nondeductible traditional IRA contribution followed by a conversion to a Roth IRA, used by people whose income exceeds the direct Roth limit. For 2025 the direct Roth phase-out tops out at $165,000 modified AGI for single filers and $246,000 for married filing jointly. Report the contribution in Part I and the conversion in Part II of the same year’s Form 8606.
The clean case produces almost no tax. If you have no other pre-tax IRA money, contribute $7,000 nondeductible, and convert the full amount, your basis equals the conversion, so the taxable amount on line 18 is near zero. Small gains earned before the conversion are taxable.
Report it in this order:
- Enter the $7,000 nondeductible contribution on line 1 of Part I.
- Add prior basis on line 2 and total on line 3.
- Enter the year-end value of all traditional, SEP, and SIMPLE IRAs on line 6, which should be near zero if the account was emptied by the conversion.
- Enter the amount converted on line 8, then complete lines 9 through 13 to find the nontaxable portion.
- Carry the conversion into Part II, lines 16 through 18, where line 18 is the taxable amount that flows to Form 1040.
A timing trap catches many filers: contribute for the prior year in the spring, then convert. The contribution belongs on the prior year’s Form 8606, but the conversion belongs on the year it actually happened. This split across two forms is correct, though tax software often mishandles it, so review lines 6 and 8 before filing.
Penalties, deadlines, and common mistakes
File the 2025 Form 8606 with your return by the due date, including extensions, generally April 15, 2026, or October 15 with an extension. Failing to file when required carries a $50 penalty unless you show reasonable cause, and overstating your nondeductible contributions carries a $100 penalty. You can file a standalone Form 8606 for a prior year if you missed one.
The most costly mistake is not tracking basis at all, which can trigger tax on money you already paid tax on. Other frequent errors include forgetting the pro-rata rule when a SEP or SIMPLE IRA is in the mix, using the conversion-date balance instead of the December 31 value on line 6, and failing to file a separate form for each spouse. Correcting basis often means amending returns and filing missing forms for each affected year.
Frequently asked questions
Do I have to file Form 8606 every year?
You file Form 8606 only for a year with reportable activity: a nondeductible traditional IRA contribution, a Roth conversion, or a distribution from an IRA that holds basis. In years with none of these, you do not file it, but your basis carries forward from the last form you filed. Keep every filed copy, since the running basis figure comes from the prior year’s line 14.
What happens if I never filed Form 8606 for past contributions?
You can file the missing forms for each prior year on a standalone basis to establish your basis on paper. Without them, the IRS treats your IRA distributions as fully taxable, so you risk double taxation on after-tax money. A $50 penalty may apply per unfiled year, though it can be waived for reasonable cause. Filing late is generally better than leaving basis undocumented.
Does the pro-rata rule count my 401(k) balance?
No. The pro-rata calculation on Form 8606 line 6 includes only traditional, SEP, and SIMPLE IRAs, plus outstanding rollovers. It excludes 401(k), 403(b), and 457(b) plan balances, Roth IRAs, and inherited IRAs. This exclusion is why some taxpayers roll pre-tax IRA money into a workplace 401(k) before a backdoor Roth, to shrink the taxable share of the conversion.
Is a backdoor Roth conversion taxable?
A backdoor Roth is largely tax-free only if you have no other pre-tax traditional IRA money. In that case your basis equals the conversion, and the taxable amount is near zero apart from any gains earned before converting. If you hold pre-tax IRA balances, the pro-rata rule makes most of the conversion taxable, even when you intend to convert only the new after-tax contribution.
What is the difference between basis and the pro-rata rule?
Basis is the total after-tax money in your traditional IRAs, tracked on Form 8606 line 14. The pro-rata rule is the method that uses that basis to split any distribution or conversion into taxable and nontaxable parts, based on the ratio of basis to your total IRA value. Basis is the number; the pro-rata rule is the formula that applies it.
Do my spouse and I file one Form 8606 together?
No. Basis is tracked per person, so each spouse files a separate Form 8606 for their own IRA activity, even on a joint return. One spouse’s pre-tax IRA balance does not affect the other’s pro-rata calculation. Combining the two is a common error that produces wrong taxable amounts on conversions and distributions.
Related reading
For the parallel basis-tracking rules that S corporation owners face, see our guide to Form 7203 S corporation shareholder basis. If your IRA holds employer plan money, our 401(k) and Retirement Plan Report 2026 covers the Form 5500 landscape. For how inherited assets reset their tax basis, read Section 1014 step-up in basis. Investors reconciling capital gains alongside IRA activity can use our Form 8949 instructions, and those comparing tax help should see CPA vs EA vs tax attorney.
Reviewed by The Ledgerism Editorial Team. Last reviewed: July 2026.