Why do I have to file Form 8606, and what happens if I never did?

Form 8606 tracks your nondeductible (after-tax) contributions to Traditional IRAs, establishing your basis so you aren't taxed twice when you withdraw or convert. If you make a nondeductible contribution, do a backdoor Roth, or take distributions from an IRA with basis, the IRS requires this form. Skip it and the IRS assumes your entire withdrawal or conversion is taxable, meaning you pay tax again on money you already paid tax on. If you missed filing in past years, you can often file the forms retroactively to establish your basis, though there may be a small penalty. Keep every year's Form 8606 permanently. See instructions at irs.gov.