Non-deductible traditional IRA contribution

KnivesOut883
KnivesOut883 Member Posts: 1 Newcomer
in Credits/Deductions

Hello,

I am filing my taxes for 2025. I made a non-deductible traditional IRA contribution - meaning I was already taxed on that contribution. I am doing a standard deduction. How do I get the software to acknowledge this to create a F8606 form? If the software cannot do it, can I just submit it manually to ensure it's recorded? I don't want to get double taxed on this IRA when I take a distribution down the road.

Thanks.

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Answers

  • MatthewD
    MatthewD FreeTaxUSA Admin, FreeTaxUSA Agent Posts: 901 image
    Hi KnivesOut883,

    Good news — Form 8606 is fully supported in the software and will automatically generate when you enter your IRA contribution. You don't need to submit it manually.

    Here's how to get there:

    1. Go to the Deductions tab
    2. Select IRA Contributions

    When you enter your traditional IRA contribution, the software will determine whether it's deductible or non-deductible based on your income and whether you're covered by an employer retirement plan (shown on your W-2). If it's non-deductible, Form 8606 will automatically be included with your return to record your basis.

    If the software treats your contribution as deductible but you want to designate it as non-deductible, you can make that election on the IRA Contribution Worksheet screen that follows.

    This will properly track your after-tax basis so you won't be taxed again on that amount when you take distributions down the road. This will also allow you to convert it to a Roth without any taxes.

    For more information see: https://community.freetaxusa.com/kb/articles/171-reporting-a-backdoor-roth-basic-scenario-2024-and-later

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