Tag: “modified adjusted gross income

Modified Adjusted Gross Income (MAGI) is an important concept for understanding IRS tax regulations. MAGI is an adjusted version of your gross income that can help you determine which deductions and credits you can claim. To calculate MAGI, add back to your Adjusted Gross Income (AGI) various deductions such as student loan interest, foreign earned income exclusion, educator expenses and more. MAGI is used to determine if someone is eligible to contribute to an IRA, as well as the amount of the contribution that is allowed. Understanding the difference between AGI and MAGI can help you accurately file taxes and take the necessary deductions.

Income

What Is Modified Adjusted Gross Income?

What Is Modified Adjusted Gross Income?
5 min read

Modified Adjusted Gross Income (MAGI) is a calculation of Annual Income used to determine eligibility for certain taxes and credits. It is derived from an individual’s Adjusted Gross Income (AGI) by adding certain income, such as foreign earned income, tax-exempt interest and excluded employer-sponsored retirement plan contributions, and subtracting certain deductions, such as student loan interest payments. Knowing MAGI can help a taxpayer identify which tax breaks for which they may be eligible.