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.

References in periodicals archive ?
Taxpayers who make Roth contributions when their modified adjusted gross income exceeds the applicable amount may also want to recharacterize.
The phase-out range for married taxpayers filing a joint return is increased to $190,000 to $220,000 of modified adjusted gross income so it is twice the range for single taxpayers.
1) Whose current year's modified adjusted gross income exceeds the prior year's adjusted gross income by more than $40,000
The Internal Revenue Service has been informed that some taxpayers who have already timely filed their 1998 federal income tax returns would like to recharacterize 1998 IRA contributions, including amounts contributed to Roth IRAs as conversions for which the taxpayers were not eligible (because their modified adjusted gross income exceeded $100,000 or because they were married individuals filing separate returns).
Any limitation on the amount of the deduction is determined through calculation of the modified adjusted gross income (AGI).
It phases out with modified adjusted gross income (AGI) between $80,000 and $90,000 for single filers, or $160,000 and $180,000 for joint returns; 40 percent of the credit is refundable.
The deduction is not available for taxpayers with modified adjusted gross income (MAGI) (as defined in Sec.
Also, in order to make the full $2,000 contribution, your modified adjusted gross income (AGI) can't exceed $95,000 for single individuals and $150,000 for married couples filing jointly.
Generally, a taxpayer whose modified adjusted gross income does not exceed $100,000 may convert an amount held in a non-Roth IRA to a Roth IRA.
Prior to the Small Business Job Protection Act of 1996, which requires different inflation calculations, taxpayers filing jointly for 1996 with modified adjusted gross income of $65,250 or less ($43,500 or less for single taxpayers) could exclude the full amount of qualified interest.
If your modified adjusted gross income doesn't exceed $100,000, consider converting your traditional IRA to a Roth account.
The deduction starts to phase out for individuals with a modified adjusted gross income (AGI) of more than $50,000, and more than $100,000 for joint filers.

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