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How to complete Form 8606: Nondeductible IRAs

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📊 Step-by-Step Guide

Step 1: Know what Form 8606 is used to report

Use Form 8606 to report:

• Nondeductible contributions you made to traditional IRAs,
• Distributions from traditional, SEP, or SIMPLE IRAs, if you have ever made nondeductible contributions to traditional IRAs,
• Distributions from Roth IRAs, and
• Conversions from traditional, SEP, or SIMPLE IRAs to Roth IRAs.

Step 2: Complete the worksheet and Forms 1099-R first

Fill in the IRS Worksheet and Forms 1099-R first. Then complete this form. Many entries will be calculated for you.

Step 3: Select the correct Form 8606 (taxpayer vs. spouse)

SureFire includes two Forms 8606: one for the taxpayer and one for the spouse. Be sure you select the correct form.

Step 4: If filing by itself, select the checkbox at the top of the form

Select the check box at the top of the form if you are filing this form by itself and not with your tax return.

🧾 Form 8606 Parts

Part I: Nondeductible Contributions to Traditional IRAs and Distributions from Traditional, SEP, and SIMPLE IRAs

Complete Part I only if one or more of the following apply:

• Your client made nondeductible contributions to a traditional IRA for 2020.
• Your client received distributions from a traditional, SEP, or SIMPLE IRA in2020and made nondeductible contributions to a traditional IRA in2020 or an earlier year. For this purpose, a distribution does not include a rollover, one-time distribution to fund an HSA, conversion, recharacterization, or return of certain contributions.
• Your client converted part, but not all, of a traditional, SEP, or SIMPLE IRA to a Roth IRA in 2020 (excluding any portion you recharacterized) and made nondeductible contributions to a traditional IRA in 2020 or an earlier year.

Part II: 20YY Conversions From Traditional, SEP, or SIMPLE IRAs to Roth IRAs

Complete this part if the taxpayer converted part or all of their traditional, SEP, and SIMPLE IRAs to a Roth IRA in 2020 (excluding any portion the taxpayer recharacterized).

Part III: Rollovers from Qualified Retirement Plans to Roth IRAs

Completethis part only if the taxpayer took a distribution from a Roth IRS in 2020. For this purpose, adistribution does not include a rollover, a qualifiedcharitable distribution, a one-time distribution to fund an HSA, recharacterization, or the return of certain contributions. See the IRS form instructions for more information.

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