I made a prior-year nondeductible IRA contribution this year and converted it this year. Which return reports each step?
They can span two returns. A timely nondeductible traditional IRA contribution designated for 2025 belongs on the 2025 Form 8606 even if you made it in early 2026. A Roth conversion that actually occurs in 2026 is a 2026 event and is reported with the 2026 return and Form 8606. The basis created on the 2025 form carries into the 2026 calculation.
The taxable portion is not determined by that contribution alone. Traditional, SEP and SIMPLE IRA balances included in the Form 8606 calculation can change the result under the pro-rata rules.
