What Is IRS Form 8606?

Tax Form 8606 Explained

Man filling out tax forms at the dining room table
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 Mikael Vaisanen / Getty Images

Definition

Form 8606, Nondeductible IRAS is an IRS tax form you're required to file if you've made nondeductible contributions to an individual retirement account (IRA) during the tax year. It is also required if you have taken Roth IRA distributions or certain other IRA distributions, or if you have converted certain accounts to a Roth IRA during the year.

Key Takeaways

  • IRS Form 8606, Nondeductible IRAs is a tax form for documenting nondeductible contributions and any associated distributions from an IRA, including traditional, SEP, and SIMPLE IRAs.
  • It is also used to report any distributions from Roth IRAs or conversions of traditional, SEP, or SIMPLE IRAs to Roth IRAs.
  • Nondeductible contributions are "after-tax" deductions that have to be reported and taxed appropriately.


How IRS Form 8606 Works

Someone who makes nondeductible (after-tax) contributions into an individual retirement account is required to fill out Form 8606. Since these contributions do not reduce your taxable income as regular IRA contributions do, they must be reported and taxed accordingly. For most taxpayers, it doesn't make sense to make non-deductible contributions to a traditional IRA. But for those whose income or their employer's 401(k) precludes deductible contributions, it may be an option.

If you have ever made nondeductible contributions to an IRA, SEP IRA, or SIMPLE IRA, you'll also need to use Form 8606 to report any distributions you take from these accounts, along with all Roth IRA distributions.

Form 8606 isn't required when you contribute to a Roth IRA, because those contributions are never tax-deductible, but the form is required if you convert a traditional IRA, SEP, or Simple IRA to a Roth IRA.

Form 8606 pg. 1
Form 8606 pg. 2

Who Uses IRS Form 8606?

You'll need to file form 8606 if any of the following applied to you during the tax year:

  • You made nondeductible contributions to any traditional IRAs.
  • You took distributions from any traditional, SEP, or SIMPLE IRA to which you have ever made any nondeductible contributions.
  • You took distributions from a Roth IRA.
  • You converted any amount from a traditional, SEP, or SIMPLE IRA to a Roth IRA.

How To Fill Out and Read Form 8606

To fill out Form 8606, you'll need to gather your information about and nondeductible contributions you made during the tax year, along with the total basis you've built up in previous years (Line 14 from your most recent Form 8606).

If you have made any previous nondeductible contributions, you'll also need to document any conversions from traditional, SEP, or SIMPLE IRAs (Part II) to Roth IRAs, as well as any distributions from Roth IRAs (Part III).

Note

If you and your spouse are both required to file Form 8606, file separate forms for each. If you need to file Form 8606 for an inherited IRAs, file a separate form for IRAs inherited from each decedent.

Where To Mail Form 8606

If you file by mail, send Form 8606 with Form 1040, your tax payment, and any other relevant tax forms, postmarked on or before the annual filing deadline, to the IRS processing office for your state.

Requirements for Filing Form 8606

File Form 8606 with your annual tax return, which is usually due on or around April 15 each year. You can file it by mail or online. Technically, the penalty for filing a late Form 8606 is $50, but the IRS is willing to waive this penalty if you can show reasonable cause for the delay. 

Tax Rules for IRA Contributions

The IRS limits your deductible contributions if you or your spouse are covered by a retirement plan through your employer, and it also limits the overall amounts you can contribute and deduct.

Note

Some taxpayers find that they have no other choice but to make nondeductible contributions if they want to save more for retirement.

  • You can only make annual deductible contributions of up to $6,000 in tax year 2022 (up to $7,000 if you're age 50 or older). The contribution limit for tax year 2023 (the return you will file in 2024), is $6,500 ($7,500 for age 50 or over).
  • This limit for deductible contributions begins dropping, however, if you are covered by a retirement plan at work and if your modified adjusted gross income (MAGI) is more than $68,000 in the 2022 tax year, or $73,000 in the 2023 tax year, and your filing status is single. For the 2022 tax year, this increases to $109,000 if you're married and file a joint return with your spouse (if a retirement plan at work covers either of you), but it plummets to $10,000 if you're married and file a separate return. In 2023, these thresholds are $116,000 and $10,000, respectively.
  • For tax year 2022, you're disqualified entirely from claiming deductible contributions if you're covered by a retirement plan at work and your MAGI is $78,000 or more in 2022 and you're single, $129,000 or more if you're married and filing jointly, or $10,000 if you're married and file a separate return. For tax year 2023, those thresholds move up to $83,000, $136,000, and $10,000, respectively.

You can contribute money in excess of these rules or if you don't qualify due to your income, but you must do so with after-tax dollars and fill out Form 8606, and you are still subject to annual contribution limits.

Frequently Asked Questions (FAQs)

Can IRS Form 8606 Be E-Filed?

You can e-file Form 8606 with the rest of your annual tax return when you e-file your 1040 and any other tax forms, along with any payments due.

Where Do I Get Form 8606, Nondeductible IRAs?

You can find Form 8606, Nondeductible IRAs on the IRS website. It's also available at many office supply stores, libraries, post offices, and other businesses that provide free tax forms. Ask your accountant for a copy. If you file with software such as TurboTax, the software will automatically fill out the form if it determines that you meet the criteria.

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Sources
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. IRS. "About Form 8606, Nondeductible IRAs."

  2. IRS. "Draft 2022 Instructions for Form 8606,"

  3. IRS. "Draft 2022 Instructions for Form 8606," Page 7.

  4. IRS. "Draft 2022 Instructions for Form 8606," Pages 8-9.

  5. IRS. "Draft 2022 Instructions for Form 8606," Page 6.

  6. IRS. "Retirement Topics - IRA Contribution Limits."

  7. IRS. “401(k) limit increases to $22,500 for 2023, IRA limit rises to $6,500.”

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