Modified adjusted gross income

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Modified Adjusted Gross Income

In the United States, the amount of income used to determine how much of a taxpayer's IRA contributions are tax deductible. One calculates the modified AGI by taking the adjusted gross income and adding back various deductions, notably interest on student loans, foreign income deductions, foreign housing deductions, and higher education costs. Depending on the modified AGI, some or all of one's IRA contributions will not be deductible.

Modified adjusted gross income (MAGI).

Your modified adjusted gross income (MAGI) is your adjusted gross income (AGI) plus deductions, such as college loan interest and contributions to a deductible individual retirement account (IRA), which you may qualify to take if your MAGI is less than the annual ceilings set by Congress.

Other deductions, such as alimony, don't have income limits.

For example, suppose you're single, have a gross income of $51,000, and you're eligible to take a deduction for your IRA contribution of $4,000. Your AGI, when all deductions are taken, turns out to be $45,500. You then add the $4,000 back to find your MAGI of $49,500. Because your MAGI is less than the ceiling for deducting your full IRA contribution for your filing status, you can take the full deduction.

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References in periodicals archive ?

Pre-2001 Act law defined modified adjusted gross income (MAGI) as adjusted gross income (AGI) determined without regard to certain losses and increased by certain amounts not includible in gross income.

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In other words, taxpayers are subject to the tax on all of their investment income only if their modified adjusted gross income exceeds the applicable amount by at least the amount of their net investment income.

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(32) Modified adjusted gross income (AGI) is the AGI increased by foreign (I.R.C.

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For Roth IRAs, keep in mind that, if you are married and filing jointly with modified adjusted gross income (MAGI) of less than $166,000, you can contribute up to the limit but, between $166,000 and $176,000, the limit is reduced.

More ways than one save

A single person or head of household qualifies for the maximum Roth IRA contribution when 2010 modified adjusted gross income is $105,000 or less.

Roth IRA changes: conversions in 2010 and beyond

The tax credit amount is phased out for buyers with higher modified adjusted gross income and zeroes out at $95,000 (single) or $170,000 (married).

Tax credit at a glance

The calculation of the earned income credit also replaces modified adjusted gross income with adjusted gross income.

Analysis of the Economic Growth and Tax Relief Reconciliation Act of 2001

It states that when two or more eligible individuals qualify with respect to the same child, only the individual with the highest modified adjusted gross income can claim the credit.