When you need Form 8606

You made nondeductible contributions to a Traditional IRA.
You took distributions from a Traditional IRA with basis in it.
You converted any portion of a Traditional / SEP / SIMPLE IRA to a Roth (backdoor Roth).
You took a distribution from a Roth IRA (Part III).

Source: IRS Instructions for Form 8606 (current). Verified verbatim against the 2025 Form 8606 PDF on 2026-05-04.

Part I — Nondeductible Contributions to Traditional IRAs (lines 1–14)

Verbatim line wording from the 2025 Form 8606:

L1Enter your nondeductible contributions to traditional IRAs for 2025, including those made for 2025 from January 1, 2026, through April 15, 2026 (see instructions)

L2Enter your total basis in traditional IRAs (see instructions)

L3Add lines 1 and 2

L4Enter those contributions included on line 1 that were made from January 1, 2026, through April 15, 2026

L5Subtract line 4 from line 3

L6Enter the value of all your traditional, traditional SEP, and traditional SIMPLE IRAs as of December 31, 2025, plus any outstanding rollovers (see instructions)

L7Enter your distributions from traditional, traditional SEP, and traditional SIMPLE IRAs in 2025. Do not include rollovers (other than repayments of qualified disaster distributions), qualified charitable distributions, a one-time distribution to fund an HSA, conversions to a Roth IRA, certain returned contributions, or recharacterizations of traditional IRA contributions (see instructions)

L8Enter the net amount you converted from traditional, traditional SEP, and traditional SIMPLE IRAs to Roth, Roth SEP, or Roth SIMPLE IRAs in 2025. Also enter this amount on line 16

L9Add lines 6, 7, and 8

L10Divide line 5 by line 9. Enter the result as a decimal rounded to at least 3 places. If the result is 1.000 or more, enter '1.000'

L11Multiply line 8 by line 10. This is the nontaxable portion of the amount you converted to Roth, Roth SEP, or Roth SIMPLE IRAs. Also enter this amount on line 17

L12Multiply line 7 by line 10. This is the nontaxable portion of your distributions that you did not convert to a Roth, Roth SEP, or Roth SIMPLE IRA

L13Add lines 11 and 12. This is the nontaxable portion of all your distributions

L14Subtract line 13 from line 3. This is your total basis in traditional IRAs for 2025 and earlier years

Returned excess contributions and basis — Pub 590-A guidance

From Pub 590-A on the Form 8606 line 2 / line 7 treatment of withdrawn excess:

“Don't take into account the amount of the withdrawn contributions in figuring line 2 (for the current year or any later year), and don't include the amount of the withdrawn contributions on line 7.” — IRS Form 8606 instructions (2025)

Translation: same-year correction → don't report the contribution or distribution on Form 8606 at all. Prior-year correction (returned in a later year) → exclude from line 2 basis going forward, exclude from line 7 distributions. Returned excess is not"basis." Do not let users carry it forward as basis.

Form 8606 interaction with prior-year-discovered excess

When an excess contribution is discovered after the §408(d)(4) timely window has closed (after April 15 with no extension, or after October 15 with the §301.9100-2(b) extension), the practical 8606 implication depends on whether the contribution was deductible:

Deducted excess:the deduction was claimed on the original return. File Form 1040-X to remove the deduction. Form 8606 is not affected (the contribution wasn't basis to begin with). Form 5329 Part III tracks the excise.
Nondeductible excess: the contribution was reported on Form 8606 line 1 in the contribution year and added to line 14 basis. If you later withdraw it (without NIA, post-deadline), reduce line 2 in that future year by the withdrawn amount per the Pub 590-A instruction above — do not include it on line 7.
Excess that's neither deducted nor reported: common when the contribution was a Roth contribution mistakenly classified as Traditional. Correct via Form 1040-X for the contribution year. The 8606 picture going forward depends on the ultimate classification.

Backdoor Roth — Form 8606 Part II reporting

A “backdoor Roth” is a nondeductible Traditional IRA contribution converted immediately to Roth. Both legs report on Form 8606:

The contribution leg → Part I. Report the nondeductible contribution on line 1 (and adjust your year-end basis on line 14 if no offsetting conversion).
The conversion leg → Part II. Report the converted amount on line 8 (and again on line 16 in Part II). Lines 17 and 18 split the conversion into nontaxable (basis) and taxable (earnings + pre-tax IRA balance) portions via the line 10 ratio from Part I.

Critical: the line 10 ratio uses the Dec 31 value of allyour Traditional, SEP, and SIMPLE IRAs (line 6). If you have any pre-tax balance in a separate Traditional IRA, that pre-tax money pulls part of your conversion through line 10 as taxable — even though the contribution you intended to convert was 100% basis. This is the “pro-rata rule” trap. The cleanest backdoor Roth has a $0 line 6 (no other pre-tax IRA balances, optionally rolled into a 401(k) before December 31).

Backdoor Roth basis-tracking — pro-rata rule worked through

Suppose you contribute $7,000 nondeductible to a new Traditional IRA in March 2025 and convert it the next day (so the IRA value is $7,000 at conversion, no earnings). At Dec 31, 2025 you also have $63,000 in a separate pre-tax Traditional IRA from an old 401(k) rollover. Then for 2025:

Line 1: $7,000 (the nondeductible contribution).
Line 2: $0 (assume no prior basis).
Line 3: $7,000.
Line 5: $7,000.
Line 6: $63,000 (Dec 31 value of the OTHER Traditional IRA — the $7,000 was already converted out).
Line 7: $0.
Line 8: $7,000 (the conversion).
Line 9: $70,000.
Line 10: $7,000 / $70,000 = 0.100.
Line 11: $7,000 × 0.100 = $700 (nontaxable portion of the conversion).
Taxable conversion: $7,000 − $700 = $6,300taxable. Even though the dollars you converted were 100% nondeductible, the pro-rata rule pulls the other IRA's pre-tax balance into the taxability calculation.
Line 14: $7,000 − $700 = $6,300 in remaining basis carried to 2026.

Mitigation: roll the $63,000 pre-tax IRA into a 401(k) (or convert it separately) before December 31 of the conversion year, so line 6 reads $0 and the conversion is fully tax-free.

Excess + nondeductible interaction

If your prior-year excess Traditional IRA contribution was nondeductible, Form 5329 Part III handles the excise and Form 8606 tracks the surviving basis. Both must be filed. A corrective distribution of an excess nondeductible contribution returns basis (not taxable) plus NIA (taxable in the contribution year per IRC §408(d)(4)).

Also relevant

Form 5329 walkthrough — the excise return that pairs with 8606 when basis and excess overlap.
Prior-year vs current-year excess — which year basis is carried into and which year NIA is reported.
Sources — IRC §408(d), Form 8606 instructions, and Pub 590-B verification entries.
Run the NIA calculator — for the basis vs earnings split on a corrective distribution.

Informational, not tax advice. Consult a CPA or Enrolled Agent before acting on a corrective distribution.

Form 8606 walkthrough: nondeductible basis