What is Form 8606, and when do expats file it?
Form 8606 reports nondeductible traditional IRA contributions, Roth IRA conversions, and distributions from IRAs with basis. Expats file it to track basis in traditional IRAs funded with nondeductible contributions and to document Roth conversion amounts (IRS: Form 8606).
When Form 8606 is required:
- Nondeductible traditional IRA contribution in the year.
- Distributions from a traditional IRA with any basis.
- Roth conversion from a traditional IRA or 401(k).
- Roth IRA distribution before age 59-1/2 or under the 5-year rule.
Why basis tracking matters:
- Basis (nondeductible contributions) is not taxed on distribution.
- Pro-rata rule: each distribution is part taxable (growth + deductible contributions) and part non-taxable (basis).
- Without the Form 8606 trail, the IRS assumes everything is taxable.
| Scenario | Form 8606 |
| Nondeductible IRA contribution | Yes (annual) |
| Roth conversion | Yes (year of conversion) |
| Distribution from IRA with basis | Yes |
| Roth IRA qualified distribution (age 59.5, 5 years) | No |
| Early Roth distribution | Yes |
Expat-specific uses:
- FEIE users often make nondeductible IRA contributions (because FEIE reduces earned income, the full phase-out of the deduction is triggered). Form 8606 tracks the basis.
- Backdoor Roth: a nondeductible contribution followed by conversion, both reported on Form 8606.
- Roth conversion strategy: converting at low-income expat years builds tax-free retirement savings.
Penalty for failure to file: $50. But failing to track basis costs more because you pay tax twice on the same money.
For more, see our IRAs for Expats guide.
Last updated on April 29, 2026
