Form 8606 Instructions 2026: Line by Line With Filled Examples
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Quick Answer
Form 8606 has three parts, and a typical filer completes only one or two of them: Part I tracks the after-tax basis in your traditional, SEP and SIMPLE IRAs (lines 1 to 15c), Part II taxes a Roth conversion (lines 16 to 18), and Part III taxes a Roth IRA withdrawal that is not a qualified distribution (lines 19 to 25c). As of October 23, 2026 the current form on IRS.gov is the 2025 form (Instructions for Form 8606 dated December 10, 2025) and the IRS page lists no 2026 draft; a 2026 conversion is therefore reported on the 2026 form in 2027, with line 6 measured on December 31, 2026. The number that decides most results is line 6, “the value of all your traditional IRAs as of December 31, 2025, plus any outstanding rollovers” on the 2025 form, because line 10 divides your basis by lines 6 + 7 + 8. In our worked example, a $100,000 conversion with $38,000 of basis is $89,500 taxable on line 18 and leaves $27,500 of basis on line 14 (our arithmetic). Skipping the form costs $50 per failure, and overstating basis costs $100, each unless there is reasonable cause (Instructions for Form 8606 (2025)).
Key Takeaways
- Which part you fill depends on what happened in the year. A nondeductible contribution with no withdrawal or conversion stops at line 3, which you copy to line 14. A withdrawal or a partial conversion with basis sends you through lines 4 to 14. A conversion of everything skips Part I and uses line 17. A non-qualified Roth withdrawal uses Part III only.
- Line 6 is read after the year's withdrawals and conversions, and line 9 adds them back: line 9 = line 6 + line 7 + line 8. Line 10 is line 5 divided by line 9, “rounded to at least 3 places”, and it is capped at 1.000.
- Worked example A (our arithmetic): $38,000 of basis, a $20,000 withdrawal and $180,000 left on December 31 give line 10 = 0.190, $3,800 nontaxable on line 12, $16,200 taxable on line 15c, and $34,200 of basis carried to line 14.
- Worked example B (our arithmetic): converting $100,000 with $38,000 of basis and $262,000 left on December 31 gives line 10 = 0.105, $10,500 on line 17 and $89,500 taxable on line 18. If the custodian's value of an illiquid IRA were $100,000 lower, the taxable amount would be $85,500; $100,000 higher, $91,800.
- An inherited traditional IRA keeps the decedent's basis: Publication 590-B says “that basis remains with the IRA”, and the instructions say to file a separate Form 8606 for the IRA from each decedent. In the year the owner dies, distributions the owner took before death are tested against the value at the date of death instead of December 31 (Publication 590-B).
- Part III follows a fixed order from Publication 590-B: regular contributions first, then conversion and rollover amounts first-in first-out with the taxable portion first, then earnings. Worked example D (our arithmetic): a $40,000 nonqualified withdrawal with $22,000 of contribution basis and $15,000 of conversions has $3,000 taxable on line 25c.
- The penalties are statutory: 26 U.S.C. 6693(b) sets $50 for failing to file a required form and $100 for each overstatement of nondeductible contributions, in both cases unless the failure or overstatement is due to reasonable cause.
CSV · 146 rows
Form 8606 line by line: 2025 form lines, penalties, 2026 IRA figures and four filled examples
146 rows: every Form 8606 (2025) line, the filing and valuation rules, the penalties, the 2026 IRA figures from Notice 2025-67, and the filled examples A to D (our arithmetic).
Which parts of Form 8606 do you fill in?
The form's own question decides it. After line 3 the form asks whether you took a distribution from a traditional IRA or made a Roth conversion in the year; if not, you enter line 3 on line 14 and stop Part I. The table below is our reading of the form and the Instructions for Form 8606 (2025), which are the current ones on October 23, 2026.
| What happened in the year | Parts and lines | Where the result goes |
|---|---|---|
| A nondeductible contribution, no withdrawal, no conversion | Part I, lines 1 to 3, then line 3 onto line 14 | Line 14 becomes next year's line 2 |
| A withdrawal from a traditional IRA when you have basis | Part I, lines 1 to 14 and 15a to 15c | Line 15c goes to Form 1040 line 4b when above zero |
| A partial conversion to a Roth IRA when you have basis | Part I, lines 1 to 14, then Part II, lines 16 to 18 | Line 18 goes to Form 1040 line 4b when above zero |
| A conversion of all your traditional IRAs | Part II only: line 17 is line 2 plus line 1 contributions made before the conversion | Line 18 goes to Form 1040 line 4b when above zero |
| A Roth IRA withdrawal that is not a qualified distribution | Part III, lines 19 to 25c | Line 25c goes to Form 1040 line 4b when above zero |
| Only regular contributions to a Roth IRA | No Form 8606 needed | The instructions say you do not have to file solely to report them, but to keep the records |
| A qualified charitable distribution, a rollover, a one-time HSA transfer or a recharacterization | Not on line 7 | The instructions list each as an exclusion from line 7 |
| Distributions from an inherited traditional IRA that has basis | A separate Form 8606 for the IRA from each decedent | Basis stays with the inherited IRA (Publication 590-B) |
Source: Form 8606 (2025); Instructions for Form 8606 (2025), Who Must File and the line 7, 17 and 19 instructions; Publication 590-B (2025), saved October 23, 2026.
Married couples file one form each: the form says “If married, file a separate form for each spouse required to file 2025 Form 8606”. Publication 590-A adds that you must file Form 8606 to report nondeductible contributions even if you do not have to file a tax return for the year.
Part I, line by line
Part I is where most of the confusion sits. The lines below are the 2025 form; no 2026 form is published, and we expect it to keep the same structure with 2026 dates (our reading).
| Line | What the form asks | Where the number comes from, and the trap |
|---|---|---|
| 1 | Nondeductible contributions for the year, including those made from January 1 through April 15 of the next year | The IRA Deduction Worksheet in the Form 1040 instructions or the worksheet in Publication 590-A. Contributions returned to you with their earnings are left out. A SEP or SIMPLE employer contribution is not a nondeductible contribution. |
| 2 | Total basis from earlier years | -0- in the first year. After that, the Total Basis Chart in the instructions: for a last form filed for a year after 2023 and before 2025, line 14 of that form, adjusted by any line 15c worksheet. Adjust for returned excess contributions, divorce transfers and after-tax amounts rolled in from a plan. |
| 3 | Add lines 1 and 2 | With no distribution and no conversion, copy line 3 to line 14 and stop Part I. |
| 4 | Line 1 contributions made from January 1 through April 15 of the next year | The instructions say these are not included in figuring the nontaxable part of that year's distributions. |
| 5 | Subtract line 4 from line 3 | The basis that can count against this year's distributions and conversions. |
| 6 | Value of all traditional IRAs on December 31, plus outstanding rollovers | Every traditional, SEP and SIMPLE IRA, at the value on the custodian's statement. An outstanding rollover is generally a distribution received after November 1 and rolled over in the next year within the 60 days. |
| 7 | Distributions from traditional IRAs in the year | Not rollovers, conversions, recharacterizations, QCDs, a one-time HSA funding distribution or returned contributions. |
| 8 | Net amount converted to Roth IRAs | Also entered on line 16. |
| 9 | Add lines 6, 7 and 8 | Puts the year's withdrawals and conversions back into the pot. |
| 10 | Line 5 divided by line 9 | A decimal rounded to at least 3 places; if it is 1.000 or more, enter 1.000. This is the nontaxable share. |
| 11 | Line 8 times line 10 | The nontaxable part of the conversion; also line 17. |
| 12 | Line 7 times line 10 | The nontaxable part of distributions you did not convert. |
| 13 | Add lines 11 and 12 | All the basis used this year. |
| 14 | Line 3 minus line 13 | Your remaining basis. It becomes line 2 of the next Form 8606 you file. |
| 15a | Line 7 minus line 12 | The taxable part of the distributions you did not convert. |
| 15b | Part of 15a from qualified disaster distributions | Enter -0- if you have none; otherwise Form 8915-F rules apply. |
| 15c | Taxable amount | Goes on Form 1040 line 4b when above zero. The form notes a possible additional 10% tax under age 59½ (Form 5329). |
Source: Form 8606 (2025) and Instructions for Form 8606 (2025), lines 1 to 15c, saved October 23, 2026.
Three details cause most mistakes. First, line 6 is a December 31 snapshot taken after the year's moves, which is why line 9 adds lines 7 and 8 back; 26 U.S.C. 408(d)(2) says “all individual retirement plans shall be treated as 1 contract” and that the value is figured at the close of the calendar year, increased by distributions during the year. Second, the instructions say a statement of each IRA's December 31 value “should be sent to you by January 31, 2026”, so an IRA that holds real estate, a non-traded REIT or an LLC interest is counted at the custodian's reported number; our guide to RMDs on illiquid IRA assets shows where that number comes from. Third, line 2 depends on last year's line 14, which is why the instructions' list of records to keep includes every earlier Form 8606.
Part II and Part III, line by line
| Line | What the form asks | Where the number comes from, and the trap |
|---|---|---|
| 16 | Amount converted | Line 8 if you completed Part I; otherwise the net amount converted. |
| 17 | Basis in the amount converted | Line 11 if you completed Part I. If not, line 2 plus any line 1 contributions made before the conversion. |
| 18 | Taxable amount | Line 16 minus line 17. If zero or less, the instructions say to put the full distribution on Form 1040 line 4a and not to include a result on line 4b. |
| 19 | Nonqualified distributions from Roth IRAs | Not rollovers, recharacterizations, returned contributions, QCDs, a one-time HSA funding distribution or the other excluded items in the instructions. If nothing is left to enter, Part III is skipped and the withdrawal is reported on line 4a only. |
| 20 | Qualified first-time homebuyer expenses | Not more than $10,000 reduced by earlier such distributions. |
| 21 | Line 19 minus line 20 | If zero or less, enter -0-. |
| 22 | Basis in regular Roth IRA contributions | The total of regular contributions, adjusted for recharacterizations; a worksheet applies if you took Roth distributions in earlier years. |
| 23 | Line 21 minus line 22 | If above zero, an additional 10% tax may apply; Form 5329 decides. |
| 24 | Basis in conversions and plan rollovers to a Roth IRA | The total of all your conversions (line 16 of earlier forms), taxable or not; -0- if you never converted. |
| 25a | Line 23 minus line 24 | What is left is treated as earnings. |
| 25b | Part of 25a from qualified disaster distributions | Enter -0- if you have none. |
| 25c | Taxable amount | Goes on Form 1040 line 4b when above zero; an additional 10% tax may apply under age 59½. |
Source: Form 8606 (2025) and Instructions for Form 8606 (2025), lines 16 to 25c, saved October 23, 2026.
The order behind Part III comes from Publication 590-B. A nonqualified Roth withdrawal is treated as coming first from regular contributions, then from conversion and rollover contributions on a first-in first-out basis with the “Taxable portion (the amount required to be included in gross income because of the conversion or rollover) first”, then the nontaxable portion, and last from earnings. Our Roth IRA 5-year rules guide covers the clocks that decide whether a withdrawal is qualified in the first place.
Four filled examples (our arithmetic)
All figures below are assumed by us and computed by a script; the inputs are not from any IRS document and every line is also in the data download. Line 10 is rounded to 3 places, the minimum the form asks for. Tax rates are left out on purpose: the output is the taxable amount that goes on Form 1040 line 4b.
Example A: a $20,000 withdrawal when you have $38,000 of basis
A saver has $38,000 of basis from earlier Forms 8606 (line 2), makes no new nondeductible contribution, takes $20,000 out of a traditional IRA and has $180,000 left in all traditional IRAs on December 31. There is no conversion.
| Line | Entry | How it is reached |
|---|---|---|
| 1 and 4 | $0 | No new nondeductible contribution |
| 2 and 3 | $38,000 | Line 2 from last year's line 14; line 3 = line 1 + line 2 |
| 5 | $38,000 | Line 3 minus line 4 |
| 6 | $180,000 | December 31 value of all traditional IRAs |
| 7 | $20,000 | The withdrawal |
| 8 | $0 | No conversion |
| 9 | $200,000 | $180,000 + $20,000 + $0 |
| 10 | 0.190 | $38,000 / $200,000 |
| 12 and 13 | $3,800 | $20,000 x 0.190; nothing on line 11 |
| 14 | $34,200 | $38,000 - $3,800: basis carried to next year |
| 15a and 15c | $16,200 | $20,000 - $3,800: taxable, to Form 1040 line 4b |
If the saver is under age 59½ the form warns of a possible additional 10% tax on line 15c, which Form 5329 settles and which we do not compute.
Example B: a $100,000 conversion with prior basis and an illiquid IRA
The same $38,000 of basis. Before the conversion the saver holds $362,000 in traditional IRAs: a self-directed IRA that the custodian values at $250,000 for December 31 and a cash IRA of $112,000. The saver converts $100,000 of the cash IRA. The December 31 value of what is left is $262,000 ($250,000 + $12,000).
| Line | Entry | How it is reached |
|---|---|---|
| 2, 3 and 5 | $38,000 | Prior basis; no new contribution |
| 6 | $262,000 | Value left on December 31 |
| 7 | $0 | No withdrawal other than the conversion |
| 8 and 16 | $100,000 | The conversion |
| 9 | $362,000 | $262,000 + $0 + $100,000 |
| 10 | 0.105 | $38,000 / $362,000 = 0.10497, rounded to 3 places |
| 11 and 17 | $10,500 | $100,000 x 0.105 |
| 14 | $27,500 | $38,000 - $10,500: basis still to recover |
| 18 | $89,500 | $100,000 - $10,500: taxable, to Form 1040 line 4b |
The three-place rounding matters by a few dollars: the unrounded fraction would make $10,497 nontaxable. The valuation of the illiquid IRA matters more, because it sits in line 6:
| Custodian value of the illiquid IRA | Line 6 | Line 10 | Line 17 | Line 18 taxable | Line 14 basis left |
|---|---|---|---|---|---|
| $150,000 | $162,000 | 0.145 | $14,500 | $85,500 | $23,500 |
| $250,000 | $262,000 | 0.105 | $10,500 | $89,500 | $27,500 |
| $350,000 | $362,000 | 0.082 | $8,200 | $91,800 | $29,800 |
Valuing the illiquid IRA $100,000 lower than $250,000 lowers the taxable amount by $4,000, and valuing it $100,000 higher raises it by $2,300 (our arithmetic). Had the saver converted all $362,000, Part I would be skipped and line 17 would be line 2, $38,000, so line 18 would be $324,000. Why the December 31 value is a custodian number and how it is built is in our Roth conversion guide for IRAs with illiquid assets, and the backdoor version of this fraction, with a $7,500 contribution and a $400,000 IRA, is in the backdoor Roth pro-rata guide.
Example C: the year of death and the heir
Two forms are involved, and they are not combined. The owner's last Form 8606 is the one for the year of death. Publication 590-B says that in that year, for distributions made before death, “the value of all traditional (including SEP and SIMPLE) IRAs should be figured as of the date of death instead of December 31.” Assume the owner had $60,000 of basis, took $10,000 out before dying and the IRAs were worth $300,000 at the date of death.
| Line | Owner's last form (C1) | Heir's form (C2) |
|---|---|---|
| 2 and 3 | $60,000 | $58,060 (the owner's line 14) |
| 6 | $300,000 (date of death) | $240,000 (December 31 value of the inherited IRA) |
| 7 | $10,000 | $30,000 |
| 9 | $310,000 | $270,000 |
| 10 | 0.194 | 0.215 |
| 12 and 13 | $1,940 | $6,450 |
| 14 | $58,060 | $51,610 |
| 15a and 15c | $8,060 taxable | $23,550 taxable |
For the heir, Publication 590-B says “that basis remains with the IRA”, and a surviving spouse who treats the IRA as their own is the exception to keeping it separate. The instructions say to file a separate form for the IRA from each decedent. We read the heir's line 2 as the decedent's last line 14 and line 6 as the value of that inherited IRA only; the instructions do not spell out the line 2 hand-off in those words, so a preparer should confirm it. The 10-year distribution clock for most heirs is in our inherited IRA 10-year rule guide.
Example D: a nonqualified Roth IRA withdrawal
A saver under age 59½ takes $40,000 from a Roth IRA, with no first-time homebuyer expenses. The saver's regular contributions total $22,000 (line 22) and earlier conversions total $15,000 (line 24).
| Line | Entry | How it is reached |
|---|---|---|
| 19 and 21 | $40,000 | The withdrawal; line 20 is $0 |
| 22 | $22,000 | Regular contribution basis |
| 23 | $18,000 | $40,000 - $22,000: may attract the additional 10% tax |
| 24 | $15,000 | All earlier conversions |
| 25a and 25c | $3,000 | $18,000 - $15,000: taxable earnings, to Form 1040 line 4b |
The $15,000 of converted amounts is treated as withdrawn without income tax (it was taxed or was basis when converted), but each conversion has its own 5-year clock for the 10% tax, which Form 5329 and Publication 590-B work out and we do not compute here.
What goes wrong, and what it costs
| Problem | What the sources say | Cost or consequence |
|---|---|---|
| A required Form 8606 is not filed for a year with a nondeductible contribution | “If you are required to file Form 8606 to report a nondeductible contribution to a traditional IRA for 2025 but don't do so, you must pay a $50 penalty, unless you can show reasonable cause.” | $50 per failure (26 U.S.C. 6693(b)(2)), and no record of the basis that line 2 needs next time |
| Basis is overstated | “If you overstate your nondeductible contributions, you must pay a $100 penalty, unless you can show reasonable cause.” | $100 per overstatement (26 U.S.C. 6693(b)(1)) |
| Earlier forms are lost | The instructions tell you to keep every Form 8606, Form 5498 and Form 1099-R, and the page 1 of each Form 1040 for years with a nondeductible contribution, until all distributions are made | Line 2 and line 22 cannot be rebuilt from this year's form alone |
| Line 6 does not match the custodian's statement | The instructions say a statement of each IRA's December 31 value should be sent by January 31; the records list includes the Forms 5498 that show those values | The fraction on line 10 is only as good as line 6 |
| A contribution was entered as nondeductible and later changed | The instructions allow a change from nondeductible to deductible, or the reverse, within the Form 1040-X time limit, using a new Form 8606 | File the revised form with Form 1040-X |
| Husband and wife use one form | The form asks for a separate form for each spouse required to file | Each spouse's basis is tracked separately |
Source: Instructions for Form 8606 (2025), Penalty for Not Filing, Overstatement Penalty, What Records Must I Keep, Amending Form 8606; 26 U.S.C. 6693(b); saved October 23, 2026.
The instructions we saved describe amending within the Form 1040-X time limit; they do not describe a separate procedure for filing a missed Form 8606 for an old year, so a reader in that position needs a preparer to look at the facts (our reading).
2026: what changes and what does not
The 2025 form and instructions are still the current revisions on IRS.gov on October 23, 2026, and the IRS product page lists no 2026 draft. A conversion or withdrawal made in 2026 is reported on the 2026 form, filed in 2027, and line 6 will then be the value on December 31, 2026 (our reading, since the 2026 instructions are not out). These 2026 IRA figures from IRS Notice 2025-67 set the contribution side that feeds line 1:
| 2026 figure | Amount | Compared with 2025 |
|---|---|---|
| IRA contribution limit (section 219(b)(5)(A)) | $7,500 | up from $7,000 |
| Catch-up for age 50 or older (section 219(b)(5)(B)(ii)) | $1,100 | up from $1,000 |
| Traditional IRA deduction phase-out, single, covered by a workplace plan | $81,000 to $91,000 | up from $79,000 to $89,000 |
| Same, married filing jointly, contributor covered | $129,000 to $149,000 | up from $126,000 to $146,000 |
| Same, joint, only the spouse covered | $242,000 to $252,000 | up from $236,000 to $246,000 |
| Roth IRA contribution phase-out, married filing jointly | $242,000 to $252,000 | up from $236,000 to $246,000 |
| Roth IRA contribution phase-out, single or head of household | $153,000 to $168,000 | up from $150,000 to $165,000 |
Source: IRS Notice 2025-67, saved October 23, 2026.
The date to watch is December 31, 2026: line 6 will count what each custodian reports for December 31, 2026, so a change in an illiquid IRA's reported value before then moves line 10 (our reading of the form's line 6 text and 26 U.S.C. 408(d)(2)). The IRS has not published the 2026 instructions, so any change in the form's structure would show up only when it does.
What a reader can do with this
- Find your last line 14. Pull the most recent Form 8606 you filed; its line 14 is your line 2 this year. If you cannot find one, list the years you made nondeductible contributions and ask the preparer who filed those returns for the forms.
- Collect the December 31 statements. For line 6, add the December 31 value of every traditional, SEP and SIMPLE IRA from the custodians' statements, the illiquid ones included, and keep the statement with the return.
- Run the fraction before you move money. Put your basis (line 5) over lines 6 + 7 + 8, as in examples A and B, to see the taxable part before a withdrawal or a conversion. For the tax rate side of a conversion, our Roth conversion calculator guide maps brackets, IRMAA, NIIT and Social Security.
- Keep the exclusions off line 7. A qualified charitable distribution, a rollover and a one-time HSA transfer are not line 7 distributions; our QCD guide for IRAs with illiquid assets covers the first.
- Keep every form. Per the instructions, keep each Form 8606, Form 5498 and Form 1099-R until all distributions have been made.
FAQ
Update alert · free
An email when the Form 8606 instructions and basis rules numbers change
When a rate, rule or filing behind this page changes: what changed, the one number that matters, and the source to check it yourself.
Related IRA forms: Form 1099-R box 7 codes · Form 5498 box by box.
Sources, read and saved on October 23, 2026: Form 8606 (2025) and Instructions for Form 8606 (2025, dated December 10, 2025), IRS.gov; the IRS Form 8606 product page (WebFetch summary, page last reviewed July 10, 2026); Publications 590-A and 590-B (2025); IRS Notice 2025-67; 26 U.S.C. 408, 408A and 6693 (Cornell Legal Information Institute). The savers, balances, custodian values and heirs in examples A to D are assumptions of ours and all sums are our arithmetic. This is analysis of public documents, not investment, legal or tax advice.
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