A nondeductible traditional IRA contribution is money you contribute after tax and do not deduct on your federal income tax return. For 2025, you generally report it on Form 8606, even if you owe no tax or are not otherwise required to file a return. Filing accurately preserves your IRA basis—the amount that may later be distributed without being taxed again.
What makes an IRA contribution nondeductible?
A traditional IRA contribution is nondeductible when you do not claim it as a deduction on your federal return. The contribution is made with after-tax money, so it creates tax basis: a record of money that has already been taxed. That basis matters when you later take money out of traditional IRAs or convert some of it to a Roth IRA.
For 2025, the general IRA contribution limit is $7,000, or $8,000 if you are age 50 or older. These are annual limits, not the amount you must contribute or deduct. Check the IRS rules for the specific tax year before applying these figures to another year.
When do you file Form 8606?
The IRS uses Form 8606 to report nondeductible traditional IRA contributions, calculate the nontaxable part of IRA distributions when basis exists, and report Roth conversions. The 2025 instructions require you to file the form if you made a nondeductible traditional IRA contribution for 2025.
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You may have to file Form 8606 even if you are not otherwise required to file an income tax return. If you file a return, attach Form 8606 and submit it by the return’s due date, including extensions. If you do not have to file a return, sign Form 8606 and send it to the IRS place and by the time a return would otherwise be filed. Use the 2025 Instructions for Form 8606 for the applicable filing details.
- File a separate Form 8606 for each spouse who is required to file one.
- Employer contributions to SEP and SIMPLE arrangements are not your nondeductible traditional IRA contributions for this reporting purpose.
How to report a 2025 nondeductible contribution
- Gather your records. Find your contribution amounts and dates, prior Forms 8606, and records of IRA rollovers, distributions, and Roth conversions.
- Identify contributions designated for 2025. A contribution made between January 1 and April 15, 2026, can be designated for 2025. Follow the 2025 form instructions for how that timing affects the calculation if you also took a distribution during 2025.
- Complete Part I of Form 8606. Report current-year nondeductible contributions and carry forward any prior basis as directed by the form. If you had no distribution or conversion, the form generally calculates basis to carry into a future year.
- Account for distributions, conversions, and IRA values if applicable. If you took a distribution or converted funds to a Roth IRA, the 2025 calculation also considers the December 31 value of your traditional IRAs, distributions, conversions, and outstanding rollovers. Use the form and its instructions rather than treating the contribution amount as automatically tax-free.
- Attach and retain the form. Submit it with your federal return, or follow the separate filing procedure if you are not required to file a return. Keep a copy with your tax records.
How basis affects withdrawals and Roth conversions
Basis generally consists of nondeductible contributions and certain nontaxable rollover amounts, reduced by nontaxable distributions and adjusted in some circumstances. It is not necessarily the amount of a particular IRA account or the amount you can withdraw tax-free at any time.
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When basis exists, Form 8606 uses it in a calculation that also accounts for relevant IRA values, distributions, conversions, and outstanding rollovers. As a result, a distribution or Roth conversion is not automatically tax-free just because you made nondeductible contributions. The part attributable to untaxed traditional IRA money is taxable when converted to a Roth IRA; the conversion is reported on Form 8606.
The IRS instructions emphasize: “Keep track of your basis to figure the nontaxable part of your future distributions.” Save prior Forms 8606 along with records of contributions, conversions, distributions, and rollovers so you can establish the basis carried into later years.
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What if you forgot to file Form 8606?
Do not guess at your basis or assume it disappeared. Gather prior tax returns, IRA statements, contribution confirmations, and records of rollovers and withdrawals. Then use the IRS guidance for the relevant tax year to determine how to correct the missing reporting; the proper correction depends on the years and transactions involved.
The IRS warns that failing to report nondeductible contributions can cause contributions to be treated as deductible when withdrawn unless you can substantiate that they were after-tax contributions. Under 2025 Publication 590-A, the potential penalty for failing to file a required Form 8606 is $50 absent reasonable cause; the potential penalty for overstating nondeductible contributions is $100 absent reasonable cause. These penalties are not a substitute for correcting the record.
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IRS forms and guidance
- 2025 Form 8606
- 2025 Instructions for Form 8606
- IRS Publication 590-A
- IRS Publication 590-B
- IRS IRA frequently asked questions
This guide covers U.S. federal rules, with form mechanics and figures specific to 2025. Individual circumstances can change the calculation, so use the IRS instructions for your tax year or consult a qualified tax professional if your records or transactions are complex.
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