How does Form 8606 Link to Form 1040

[tax filing]

How does data input on Form 8606 get transferred to form 1040? Does TT do that automatically by adding my and my husband's non taxable dividends and deducting them from our distributions or do we have to do that ourselves?  Do any lines on 8606 line up directly with 1040.  We just can't figure out how data on the forms are integrated.  We would certainly appreciate your guidance!!  Thank you. 

[DawnC]

Any money you contribute to a traditional IRA that you do not deduct on your tax return is a “nondeductible contribution.” You still must report these contributions on your return, and you use Form 8606 to do so.

Reporting them saves you money down the road. That’s because no individual’s money is supposed to be subject to federal income tax twice. Form 8606 gets it “on the record” that a portion of the money in your IRA has already been taxed. Later on, when you take distributions, a portion of the money you get back will not be subject to income tax.

How to Trigger Form 8606 in TurboTax

Here is the blank Form 8606 and the instructions.   You can see Lines 15, 18, and 25 transfer to Form 1040.  

[dmertz]

Form 8606 has nothing to do with dividends, perhaps you meant contributions.

Entries of traditional IRA contributions on Form 8606 determine how much of the contributions goes on Schedule 1 line 20.  When IRA distributions or Roth conversions are being reported on Form 8606, the calculations on Form 8606 determine how much of the distributions being reported on Form 8606 are taxable income to be included on Form 1040 line 4b.  Any other effects on Form 1040 flow from the amounts on Schedule 1 line 20 or Form 1040 line 4b.

Because distributions from a traditional IRA are a proportionate mix of nontaxable basis in nondeductible contributions and taxable amounts, Part I of Form 8606 calculates the proportions by taking into account the amounts distributed and the year-end balance in traditional IRAs.  IRAs are individual accounts, so each individual has a separate Form 8606 even when married filing jointly.

Part III is used to calculate the taxable amount of nonqualified Roth IRA distributions by applying the ordering rules for Roth IRA distributions.

[tax filing]

Thank you Dawn for your thorough, detailed and timely response.  By following your suggested "data flow" I as able to realize that the distributions on the 8606 didn't include inherited or 401 K distributions while the 1040 transfer added the IRA distributions and the inherited together.  ( the 401 K distribution not included on either form)  We're always impressed with the information gleaned from TT support and the speed in which we get responses!!