Form 8606 and Roth Conversions: How to Report Your Conversion in 2026

Every time you convert a traditional IRA, SEP IRA, or SIMPLE IRA to a Roth IRA, you must file IRS Form 8606 with your tax return. The form does two things: it tells the IRS how much of your conversion is taxable, and it tracks your non-deductible IRA basis so you don't pay tax on the same dollars twice. Skip it, and you lose basis permanently — the IRS assumes your entire conversion was pre-tax money.

The form has three parts. Most Roth converters only need Part II. But if you've ever made non-deductible contributions to a traditional IRA, Part I directly affects the tax on your conversion.

The three parts of Form 8606

Part I — Non-deductible contributions to traditional IRAs

Part I tracks the basis you've built up through non-deductible IRA contributions over the years. Non-deductible contributions arise when your income is too high to deduct your traditional IRA contribution — and rather than contribute to a Roth (also income-limited), you contributed after-tax money to a traditional IRA.¹

For 2026, you cannot deduct a traditional IRA contribution if you (or your spouse) are covered by a workplace retirement plan and your MAGI exceeds:

If you contributed to a traditional IRA but couldn't deduct it, you filed (or should have filed) Form 8606 Part I that year. That filing established your cumulative non-deductible basis — the total after-tax dollars that will eventually come back to you tax-free.

Part II — Roth conversions (this is where your conversion gets reported)

Part II is the section that applies to every Roth conversion. Even if you have zero non-deductible basis (your IRA is entirely pre-tax money), you still file Part II to report the taxable amount of the conversion. The result flows to Form 1040, line 4b as ordinary income.²

Part III — Distributions from Roth IRAs

Part III is used when you take a distribution from a Roth IRA and need to determine whether any earnings are taxable. Most pre-retirees in the golden window don't need Part III yet — they're building Roth balances, not drawing them down. But once distributions begin, Part III handles the ordering rules.

Step-by-step: filling out Part II for a Roth conversion

Assume you converted $75,000 from a traditional IRA in 2026. Here is what Part II requires:

1. Line 6 — Enter the total fair market value of all your traditional IRAs, SEP IRAs, and SIMPLE IRAs at December 31, 2026 (after the conversion). If you converted $75K out of a $800K IRA, leaving $725K, line 6 = $725,000.
2. Line 7 — Enter your total distributions and conversions from all traditional/SEP/SIMPLE IRAs this year.
3. Line 8 — Enter the net amount you converted to Roth IRA(s) this year: $75,000.
4. Line 9 — Add line 6 + line 7 (this is the denominator for the pro-rata calculation).
5. Line 10 — If you have basis from Part I, divide your total basis (from Part I, line 14) by line 9. This gives the non-taxable percentage.
6. Line 17 — Multiply line 8 × line 10. This is the non-taxable portion of your conversion.
7. Line 18 — Subtract line 17 from line 8. This is the taxable amount of your conversion — it goes on Form 1040, line 4b.

How the pro-rata rule appears on the form

If you've made non-deductible contributions over the years, the pro-rata rule determines what fraction of each conversion is tax-free. The IRS looks at all your traditional IRAs together — not just the one you converted from. Form 8606 forces this calculation through the line sequence above.

Worked example — Nancy, age 60, single:

• Total traditional IRA balance at year-end: $200,000
• Non-deductible basis (tracked on prior Form 8606 filings): $20,000
• Converts $50,000 to Roth in 2026

Nancy's remaining basis after this conversion: $20,000 − $5,000 = $15,000. She updates her Part I basis line accordingly so next year's Form 8606 starts from the correct number.

See the full mechanics in our pro-rata rule guide, which includes the 401(k) rollover workaround that lets you clear IRA basis entirely.

The penalty for not filing

Under IRC § 6693(b),³ the IRS can assess a $50 penalty per occurrence for failing to file Form 8606 when required to report non-deductible contributions to a traditional IRA. The penalty is waived if you can show reasonable cause. For an overstatement of non-deductible contributions, the penalty rises to $100.

The more costly consequence isn't the dollar penalty — it's the lost basis. If you made non-deductible contributions to a traditional IRA and never filed Form 8606, the IRS has no record that you paid tax on that money. When you convert or distribute, the IRS may treat the entire amount as pre-tax income. Reconstructing basis years later requires finding old bank records, prior tax returns, and Form 1099-Rs — and if you can't prove it, you eat the double tax.

The tax documents you receive for a conversion

Your custodian sends two forms when you convert:

• Form 1099-R — reports the distribution from your traditional IRA. Distribution code in box 7 is typically 2 (early, exception applies) if you're under 59½, or 7 (normal distribution) if you're 59½ or older. Box 2a shows the taxable amount; for most pre-tax IRAs, this equals the entire conversion. Box 2b "Taxable amount not determined" is often checked — the custodian doesn't know your basis; Form 8606 is how the correct taxable amount is established.
• Form 5498 — reports the contribution to your Roth IRA. Issued by May 31 of the following year. You don't need to attach this to your return, but it confirms the Roth contribution was received.

If Form 1099-R shows the full conversion as taxable but you have non-deductible basis, do not simply accept that number. Form 8606 Part II is how you reduce the taxable amount to reflect your basis.

Common Form 8606 mistakes

1. Not filing at all

The most common error. Many people who convert entirely pre-tax IRAs assume they don't need to file because "I have no basis." You still need Part II to report the taxable conversion amount. The IRS cross-checks Form 1099-R against your return — if a conversion is reported and you have no Form 8606, you may get a matching notice.

2. Forgetting prior years' basis

Non-deductible IRA contributions accumulate on Form 8606 year after year. If you contributed non-deductible amounts starting in 2015 but only filed Form 8606 sporadically, you may have undercounted your basis. Before your first large conversion, reconstruct your complete contribution history and file any missing years.

3. Using the wrong year-end IRA balance

Line 6 asks for the December 31 value of all traditional/SEP/SIMPLE IRA accounts. If you made additional contributions in January of the following year (allowed until the April 15 filing deadline), don't include those in this year's calculation. Use only the December 31 snapshot.

4. Separating IRAs into buckets

The pro-rata rule aggregates all your traditional, SEP, and SIMPLE IRAs together, regardless of which custodian holds them. A common mistake: "I'll convert only from my non-deductible IRA and leave the pre-tax ones alone." The form doesn't work that way — all balances pool together for the ratio calculation.

5. Withholding taxes from the conversion itself

When you instruct the custodian to withhold taxes from the IRA before moving it to Roth, the withheld amount is a distribution — not a conversion. It's taxable and potentially subject to the 10% early withdrawal penalty if you're under 59½. File taxes from outside the IRA. See our Roth conversion tax payment guide for the mechanics.

6. Not filing a separate Form 8606 for each spouse

Married couples file joint returns, but each spouse's IRA basis is tracked separately. If both spouses converted in 2026, two separate Forms 8606 must be included with the joint return.

Multi-year basis tracking: a simple worksheet

If you've been making non-deductible IRA contributions for years, tracking your running basis is critical. The key columns to maintain are:

The "cumulative basis" number at the end of each year is what you carry forward to the following year's Form 8606, line 2 (prior year basis). Losing this thread — even for one year — means reconstructing from scratch. Keep a copy of every Form 8606 you've filed, or ask your CPA to maintain a basis schedule.

What the backdoor Roth adds to Form 8606

The backdoor Roth IRA — making a non-deductible IRA contribution and immediately converting — requires both Part I (to establish basis from the contribution) and Part II (to report the conversion). When done correctly in the same year with no earnings accumulation, the taxable amount on line 18 is zero.

The trap: if you have other traditional IRA balances, the pro-rata rule on Part II kills this strategy. A $7,500 backdoor contribution into an account with $200,000 in pre-tax IRA money makes about 96% of the conversion taxable. The 401(k) rollover workaround — moving all pre-tax IRA money into your employer plan before year-end — clears the pro-rata pool. See our backdoor Roth IRA guide for the full mechanics.

Filing Form 8606 with an extension

Form 8606 is filed with your regular tax return — Form 1040. If you file for an extension (October 15 deadline), Form 8606 is also extended. There is no separate extension procedure for Form 8606 itself. The Roth conversion income, however, must be included in any estimated tax payments due by April 15 to avoid underpayment penalties — the extension only extends the filing deadline, not the payment deadline.

See our guide to paying taxes on a Roth conversion for the estimated tax mechanics, quarterly deadlines, and the December withholding method for late-year conversions.

When a financial advisor handles this matters

Form 8606 is one of the cleanest examples of why Roth conversion strategy requires a tax-aware advisor. The form itself isn't complex, but the decisions it encodes — how much to convert, when to clear basis, whether the backdoor is viable, how the pro-rata calculation changes if you roll your 401(k) into your IRA — compound over 10–15 years of a golden-window conversion plan. A single year of incorrect basis reporting can create an audit headache or permanent lost basis.

If you have a mix of non-deductible and pre-tax IRA money, have made backdoor Roth contributions while carrying IRA basis, or are starting a multi-year conversion plan, this is exactly the kind of multi-year modeling a fee-only Roth conversion specialist does. They maintain a running basis schedule, flag the year-end IRA balance required for the pro-rata calculation, and ensure your Form 8606 is consistent year over year.

The annual Roth conversion checklist includes a dedicated step for Form 8606 preparation — basis reconciliation in Phase 5 (Step 25).

1. IRS Notice 2025-67 — 2026 IRA contribution and deduction phase-out thresholds: single/covered $81,000–$91,000; MFJ/covered $129,000–$149,000; non-covered spouse $242,000–$252,000. IRS Notice 2025-67 (PDF)
2. IRS Instructions for Form 8606 (2025) — Part II Roth conversion reporting; taxable amount flows to Form 1040, line 4b. IRS Instructions for Form 8606
3. IRC § 6693(b) — $50 penalty for failure to file Form 8606 when required to report nondeductible contributions; $100 penalty for overstatement; both waivable for reasonable cause. IRS About Form 8606
4. IRS Publication 590-A (2025) — Non-deductible contributions, basis tracking, pro-rata rule mechanics for distributions and conversions. IRS Pub. 590-A

Values verified as of June 2026. Form 8606 instructions cited are for the 2025 tax year; 2026 form typically released in late 2026 — structure and part assignments are stable year to year.