Records · 2025 and 2026

IRA Basis Tracking and Line 14 Carryforward Explained

Published by Moss Ladder · Updated October 17, 2026 · Editorial policy

Executive summary

IRA basis records nondeductible amounts that have not yet been recovered tax free. It can survive multiple accounts, custodians and tax years. A reliable carryforward starts with a reconciled return history, not the current account balance. This guide follows the records from contribution to distribution and shows how to investigate a gap without counting the same contribution twice.

Educational guidance for ordinary scenarios. Check the official form's year and filing branches and obtain advice for your actual records.

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Distinguish basis from an IRA balance or investment cost

Basis in this context is a tax attribute arising from nondeductible IRA contributions and certain other recognized after-tax amounts. It is not the current value of the IRA, the amount originally rolled from an employer plan, or the cost of stocks purchased inside the account. Pre-tax rollover assets can have a substantial balance and no nondeductible IRA basis. Market growth does not add regular contribution basis, and market losses do not automatically erase previously documented nondeductible contributions.

The relevant history belongs to the individual IRA owner. Moving an IRA between custodians does not restart the tax history or cause the receiving firm to know all earlier basis. Separate account numbers do not partition ordinary basis allocation. A spouse's basis remains separate even on a married filing jointly return. Create one owner's chronology containing contributions, deductions, distributions, conversions and filed Forms 8606, with account-level documents attached to each event rather than a separate incompatible basis total at every brokerage.

Understand the four carryforward lines

Line 2 generally begins with earlier unrecovered basis under the Form 8606 instructions. Line 1 adds current-year nondeductible contributions and line 3 combines them. When a conversion or relevant distribution occurs, line 4 removes the portion paid after year end from the amount available for that year's allocation. Lines 11 and 12 determine how much available basis was used by conversions and other relevant distributions. Line 13 combines that recovery. Line 14 generally equals line 3 less line 13, subject to special adjustments described in the instructions.

This relationship explains why a contribution can appear on line 1 yet remain unavailable to an earlier distribution through line 4. It also explains why a partially taxable conversion does not necessarily use all basis. A remaining-basis amount is carried forward for later treatment, not deducted from ordinary income simply because it appears on line 14. If there is no distribution or conversion, the official form directs the filer from line 3 to line 14 without completing the remaining allocation lines.

Year one: partial recovery of $7,000 prior basis

This invented example assumes one taxpayer, documented basis, eligible ordinary transactions, no special repayment and no tax withholding. Dollar amounts are planning values. Use the official form's filing branches; a displayed line is not automatically a required entry on a filed return. The 2026 examples apply published 2026 contribution limits with the 2025 allocation structure.

Year one: partial recovery of $7,000 prior basis
Form 8606 line	Modeled amount
1	$0.00
2	$7,000.00
3	$7,000.00
4	$0.00
5	$7,000.00
6	$21,000.00
7	$0.00
8	$7,000.00
9	$28,000.00
10	0.250000
11	$1,750.00
12	$0.00
13	$1,750.00
14	$5,250.00
16	$7,000.00
17	$1,750.00
18	$5,250.00
15a	$0.00
15b	$0.00
15c	$0.00

Follow the same basis into the next year

In the worked example, $7,000 prior basis is allocated against a $28,000 annual pool. The $7,000 conversion uses $1,750 basis, so $5,250 remains. Suppose the next year has no new nondeductible contribution, a $7,000 conversion and $14,000 remaining IRA value, with no other distribution or adjustment. The pool is $21,000 and the $5,250 basis produces a 25% tax-free ratio. The conversion uses another $1,750 basis, leaving $3,500. These are separate annual calculations connected by the basis record.

Do not carry forward the original $7,000 after recovering $1,750 in year one. Also do not enter the $5,250 carryforward as a fresh year-two contribution. In the annual tracker, distinguish opening basis, additions, recovered basis and closing basis, and attach the filed return reference to each line. If a later preparer corrects an earlier return, revisit subsequent opening balances. The arithmetic can be internally consistent and still be wrong when the starting tax record was duplicated or omitted.

Reconstruct missing records in a deliberate order

Start with copies of filed Forms 8606 and the associated federal returns. Compare the last applicable line 14 with any intervening year in which nondeductible contributions or IRA distributions occurred. Obtain contribution confirmations, account statements, conversion confirmations and relevant Forms 1099-R and 5498 from each custodian. A Form 5498 helps identify contributions and designated years, but does not by itself prove the deduction treatment chosen on the return. A Form 1099-R does not establish the owner's complete historical basis either.

IRS return, account or wage-and-income transcripts can help locate reported information, subject to availability and retention limits. They are not a guaranteed substitute for every historical form or an automatic basis certificate. If the record cannot be reconciled, mark the opening figure unresolved and ask a qualified preparer what additional evidence is needed. Do not assume unknown basis is zero merely to obtain a numeric estimate, and do not invent a positive amount from memory because an old IRA contribution seems likely.

Choose the correct correction procedure

A missing Form 8606, an incorrect form and an incorrect taxable distribution are related but different problems. A late standalone Form 8606 can be relevant in some circumstances, while an amended return may be needed when the taxable amount or other return items change. Form 1040-X and the applicable year's instructions determine amendment procedures. Potential Form 8606 penalties and reasonable-cause explanations depend on the facts. Do not use a blanket instruction that every missing form is fixed by filing the current year's version.

Before sending a correction, reconstruct how the proposed change flows into all later years. Retain the original return, corrected calculation, supporting evidence and mailing or electronic-filing confirmation. A preparer should determine whether special repayment rules, older basis conventions or limitations periods affect the approach. The site's basis tracker organizes annual figures and exports records locally; it neither obtains IRS transcripts nor submits amendments. A successful CSV import verifies the file structure, not the legal validity of the amount entered.

Maintain a record that another person can audit

Keep a stable annual ledger with the contribution year, actual payment date, amount treated as nondeductible, related deduction, distributions, converted amount, year-end values and basis recovered. Use separate rows for different transactions and a clear source-document reference. An early-year contribution designated for the previous year must not be counted again as a current-year addition. Reconcile the ledger to custodian totals and to the return, rather than letting each document create a new independent amount of basis.

Protect these records because they can contain sensitive account and tax information. Enter only the amounts needed by the local calculator, avoid account numbers in free-text notes, and store exports with your other financial documents. Browser storage is optional and is not an encrypted backup service. Use the clear controls on a shared device, and retain a durable copy outside the browser. Before a future conversion, recover the reconciled opening basis and review all applicable IRAs so that the next calculation starts from a supported history.

About the publisher: Moss Ladder

Moss Ladder owns and publishes RothProRata.com, an independent educational website about IRA basis, Roth conversions and Form 8606. The guides connect official sources with invented examples, document checklists and browser-local planning tools.

AI-assisted tools help prepare explanations and software. Numerical allocation examples state their assumptions and are checked with automated calculations. These engineering checks do not constitute independent CPA or Enrolled Agent review, and no professional tax credential is claimed.

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Official sources

Source year and transaction type matter. Citations support the explanation; they do not imply government endorsement.