What is the Modifiable Adjusted Gross Income (MAGI)? How do I calculate it for my dependents?

Modified on Sun, 05 Feb 2023 at 08:57 PM

Your modified adjusted gross income, or MAGI, is your adjusted gross income (AGI), plus a few additional items, such as specific deductions or exempt income. Your MAGI is used to determine if you qualify for specific tax breaks or accounts, and it can vary slightly depending on the benefit.

In order to calculate your modified adjusted gross income, you first have to know your adjusted gross income. You can find this figure on line 11 of your 1040 for previous tax years. You can also figure out your AGI by taking your gross income (the amount you make before taxes) and making adjustments for deductions like educator expenses, student loan interest, alimony payments, retirement contributions.

To figure out your MAGI, you’ll want to add back any of the below to your AGI:

  • Student loan interest deduction
  • One-half of your self-employment tax
  • Qualified tuition expenses
  • Any passive income or losses
  • Rental losses
  • Losses from a publicly traded partnership
  • IRA contributions
  • Non-taxable Social Security payments
  • Income from savings bonds, foreign income, foreign housing deductions, and adoption expense exclusions

Most of these deductions are rare, so if none of them apply to you, then your MAGI is the same as your AGI. You generally won’t find your MAGI on your tax forms, so you should reach out to a tax professional if you need help calculating this figure.

Your MAGI is important, because it helps determine if you’re eligible for specific credits, deductions, or plans, such as:

  • A Roth IRA
  • Income-based Medicaid coverage
  • The Child Tax Credit
  • Premium Tax Credit
  • Education Credits
  • IRA contribution deductions

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