The form 8606 is a tax form distributed by the Internal Revenue Service
(IRS) and used by filers who make nondeductible contributions to an IRA.
A separate form should be filed for each tax year that nondeductible contributions are made. By definition, a nondeductible contribution cannot be a pre-tax contribution.
Form 8606 is also required whenever: 1) a taxpayer converts a Traditional or SEP IRA into a Roth IRA,
or 2) receives an IRA distribution that is attributable to previous
nondeductible contributions. If 8606 is not filed in a distribution
year, the taxpayer is likely to be forced to pay income taxes (and
possibly penalties) on what could be tax-free monies.
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