Form 8606 is used to report nondeductible contributions to traditional IRAs and to report distributions from traditional IRA with a basis and distributions from Roth IRAs.
Because married persons filing jointly must use separate Forms 8606, ProSeries provides a Form 8606 for both the taxpayer and spouse.
If Form 8606 is attached to Form 1040, a signature and address are not required. If your client is not required to file Form 1040, file Form 8606 as you would Form 1040. Be sure to include the client's address and signature.
Part I of Form 8606 is used to report any nondeductible traditional IRA contributions and compute the basis in the traditional IRA. It is also used to compute the taxable portion of any traditional, SEP, or SIMPLE IRA distribution if the traditional IRA has a basis.
- If your client converted all of their traditional IRAs to Roth IRAs and did not receive any traditional, SEP, or SIMPLE IRA distributions that were not converted, Part I of Form 8606 does not need to be completed.
Part II of this form is used to compute the taxable amount of a conversion of a traditional IRA to a Roth IRA.
Part III of Form 8606 is used to compute the taxable amount of any distributions the person received from a Roth IRA