People often assume that since a nondeductible IRA contribution does not affect their taxes at the time they contribute, they don’t need to report it. But this is not true. The account owner is responsible for keeping track of the taxes if they want to eliminate the possibility of double taxation when the funds are drawn down the road. The IRS Form 8606 can help.
On this episode of Money Talks, we break down how this often-overlooked form could be the key to keeping your taxes on track.