Key takeaways
- Form 8606 is the only form that tracks after-tax basis. Form 1099-R and Form 5498 do not.
- On a backdoor conversion, Form 1099-R box 2a shows the full converted amount and box 2b is checked.
- The pro rata calculation starts with the December 31 value of all traditional IRAs on Form 8606 line 6.
- Form 5498 for tax year 2026 is due to the IRS by May 31, 2027, so the return should not wait for it.
Which forms the client should expect for 2026
Three forms cover a Roth IRA and a backdoor conversion. Form 5498 reports contributions and the year-end account value. Form 1099-R reports the conversion. Form 8606 is the form the taxpayer files, and it is the only one that tracks after-tax basis. Neither Form 5498 nor Form 1099-R tells you how much of a conversion is taxable.
Do not hold the return for Form 5498. The IRS deadline for filing it for tax year 2026 is May 31, 2027. Ask the custodian for the December 31, 2026 year-end statement instead, because the separate statement of the account value is due by February 1, 2027.
Check two numbers on Form 5498 against the conversion records. Box 3 shows the amount converted during 2026, and box 5 shows the fair market value of the account on December 31, 2026, which you need for the pro rata calculation. If box 3 does not match the Form 1099-R, call the custodian before filing.
Read the Form 1099-R for a backdoor conversion
For a backdoor conversion, the Form 1099-R should show the converted amount in box 1 and box 2a. Box 2b, labeled taxable amount not determined, should be checked. The custodian is saying it has not figured the taxable part, because it does not know your basis. That calculation belongs on Form 8606.
Box 7a holds the distribution code. Use code 2 if the participant is under age 59½ and code 7 if the participant is at least age 59½. A 44-year-old who converts in 2026 should see code 2 in box 7a, and a 61-year-old should see code 7. The code is a reporting marker. It does not decide the taxable amount.
The common error is treating box 2a as taxable income. A client who contributed $7,500 after tax and converted the same $7,500 has no taxable amount. A preparer who enters box 2a as taxable taxes that money a second time, even though it was already taxed when contributed. The fix is to enter the Form 1099-R as reported and let Form 8606 produce the taxable amount.
Form 8606 Part I: basis and the December 31 value
Form 8606 is required for a year in which the client made a nondeductible traditional IRA contribution or converted from a traditional IRA to a Roth IRA. The IRS says the form must be filed with Form 1040 by the due date, including extensions. Pub 590-A adds that Form 8606 must be filed to report nondeductible contributions even if no tax return is otherwise required.
Part I builds the basis. Line 1 is the nondeductible contribution for the year. Line 2 carries forward the basis from last year's line 14. Line 3 is the sum of lines 1 and 2. Line 6 is the total value of all your traditional IRAs as of December 31 plus any outstanding rollovers, and that number drives the pro rata calculation. The line numbers here come from the 2025 Form 8606 instructions. Check them against the 2026 instructions before you file.
Line 7 covers other distributions and leaves out the amount converted to a Roth IRA. Line 8 is the net amount converted during the year. The nontaxable part of the conversion is the basis divided by the total of the December 31 value, the other distributions and the conversion. The rest of the conversion is taxable.
Worked examples: when a rollover IRA makes the conversion taxable
Client A has no other traditional IRA money. For tax year 2026 the contribution limit is $7,500 ($8,600 if she is 50 or older). In January 2026 she makes a $7,500 nondeductible contribution, and in February she converts the same $7,500 to a Roth IRA. Her traditional IRA value on December 31, 2026 is zero. On Form 8606, line 1 is $7,500, line 2 is zero, line 3 is $7,500 and line 8 is $7,500. Her basis covers the whole conversion, so the taxable amount is zero.
Client B makes the same contribution and conversion, but also holds a rollover IRA worth 13 times the conversion amount on December 31, 2026. The denominator is that year-end value plus the conversion, which is 14 times the conversion. Basis is one part in 14 of that total, so one-fourteenth of the conversion is nontaxable and thirteen-fourteenths is taxable. That taxable part reaches Form 1040 through Form 8606 line 18, not through the Form 1099-R.
The rollover IRA is the usual reason a backdoor conversion is partly taxable. If the client has a workplace plan that accepts incoming rollovers, moving the pre-tax IRA money into that plan before December 31 takes it out of line 6. Confirm the plan's rules first, because not every plan accepts the transfer.
Carry basis across years
Client C made a $7,000 nondeductible contribution for 2025 and did not convert it. Her 2025 Form 8606 line 14 carries that basis forward, and Pub 590-A says line 14 is the source of the basis for later years. In 2026 she makes a $7,500 nondeductible contribution and converts both amounts. Her 2026 Form 8606 line 2 shows the 2025 basis, line 1 shows the 2026 contribution, and line 3 is their sum.
Collect these records for every year the IRA holds basis: each Form 8606 filed since the first nondeductible contribution, the Form 5498 for each year, the contribution confirmations, the year-end statement for every traditional IRA and the Form 1099-R for every conversion. Pub 590-A says to keep copies of your income tax return and Forms W-2, 8606 and 5498.
The failure mode is a missed Form 8606. If Client C never filed the 2025 form, her 2026 line 2 shows zero and the whole conversion looks taxable. Rebuild line 2 from the 2025 contribution confirmation and the 2025 Form 5498, then correct the missed year. Check the Form 8606 instructions for the correction method before you file, because the 2025 return may need amending.
What to request from the client
If the client made a nondeductible traditional IRA contribution or converted from a traditional IRA in 2026, request the prior-year Form 8606, the 2026 contribution confirmation, the 2026 Form 1099-R and the December 31, 2026 year-end statements. If the client made only a direct Roth contribution, no Form 8606 is needed for it, and Form 5498 box 10 shows the contribution.
Check income before accepting a direct Roth contribution. For 2026, the Roth IRA phase-out range is $153,000 to $168,000 for single filers and heads of household, and $242,000 to $252,000 for married couples filing jointly. Above the top of the range, a direct contribution is not allowed. That is why a backdoor conversion exists, and why the client needs Form 8606 in that year.
Send this request: "Please send the December 31, 2026 statement for every IRA you held, including traditional, SEP and SIMPLE accounts, even if the balance is zero. Please also send the Form 1099-R for the conversion and the Form 8606 you filed last year." Ask for these in January, when custodians have year-end values ready.
Dates to put on the calendar
The IRS lists April 15 as the due date for calendar-year individual returns. Its page shows April 15, 2026 for tax year 2025. For tax year 2026 the return is due April 15, 2027 unless the date moves, and Form 8606 is filed with that return.
Form 5498 for tax year 2026 is due to the IRS by May 31, 2027, which falls after the April return deadline. Roth contributions made in 2027 through April 15, 2027 can be designated for 2026 on Form 5498 box 10, so ask the client which year each deposit is meant for before the return is prepared.