How do I report a backdoor Roth IRA on Form 8606 in 2026?

A backdoor Roth is reported on Form 8606, and yes, you usually need that form even if the conversion was nearly tax-free. This is one of the most common filing mistakes on Reddit because people assume the brokerage already handled it. It did not.

Typical backdoor Roth sequence:

• You make a nondeductible traditional IRA contribution
• You later convert that amount to a Roth IRA
• You receive Form 1099-R for the conversion and Form 5498 showing the contribution/conversion details

What Form 8606 does:

• Reports your nondeductible traditional IRA contribution
• Tracks your basis so you are not taxed twice
• Calculates how much of the Roth conversion is taxable

The usual form flow:

• Part I of Form 8606 reports the nondeductible IRA contribution and any prior-year basis
• Part II reports the Roth conversion amount from Form 1099-R
• The form applies the pro rata rule, which means all your traditional, SEP, and SIMPLE IRAs are looked at together as of December 31

Why the pro rata rule matters:

If you have other pre-tax IRA money sitting anywhere at year-end, your conversion is not treated as "just the after-tax contribution." A portion becomes taxable based on the ratio of after-tax basis to total IRA balances. Keeping pre-tax and after-tax money in separate IRA accounts does not avoid the pro rata rule.

Example:

• You contribute $7,000 nondeductible to a traditional IRA
• You also have $63,000 in other pre-tax traditional IRAs on December 31
• Total IRA pool = $70,000, of which only 10% is basis
• A $7,000 conversion would be only 10% tax-free and 90% taxable

Do not skip Form 8606. If you leave it off, the IRS can treat the conversion as fully taxable because it has no record of your basis.