You don’t have to file Form 8606 solely to report regular contributions to Roth IRAs. But see What Records Must I Keep, later.

Is a backdoor Roth conversion taxable?

Use the “backdoor” Roth IRA strategy. Unlike traditional IRAs, the Roth version has an income threshold. There are no income limits on nondeductible IRAs or conversions to a Roth. Since these contributions are nondeductible and have already been taxed, you can convert the money tax-free.

What does form 8606 do for a Roth IRA?

Form 8606 helps track your basis and avoid paying additional tax on your non-deductible contribution as you convert the balance to a Roth IRA. The second step after making your non-deductible Traditional IRA contribution is converting your Traditional IRA balance to a Roth IRA.

Can a nondeductible IRA be converted to a backdoor Roth?

If you have no IRA balance, you can make a nondeductible contribution and then convert that contribution to Roth IRA and 100% of your Roth conversion will be after-tax and thus not taxable. In this way, if your have no other IRA money, a backdoor Roth is equivalent on your tax bill to funding your Roth IRA directly in the first place.

What is the tax line for a backdoor Roth IRA?

The Form 8606 is what determines the taxable amount created by the Backdoor Roth IRA (in Charlie’s case, $10). As a check, you should ensure that the Lines 18 of your previously filed Forms 8606 agree to the appropriate line on the Form 1040 (line 4b in 2018).

When do I need to file 8606?

Basically, you must file Form 8606 for every year you contribute after-tax amounts (non-deductible IRA contribution) to your Traditional IRA, and every year you receive a distribution from your IRA as long as you have after-tax amounts, including rollovers of after-tax amounts from qualified plans, in any of your traditional, SEP or SIMPLE IRAs.