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 with modified adjusted gross incomes of between 100 and 400 percent of the federal poverty guideline may be eligible for the credit.
They file jointly and their modified adjusted gross income is $115,100.
The credit phases out for modified adjusted gross income from $75,000 to $95,000 ($150,000 to $170,000 for a joint return).
Even though the Wilsons' modified adjusted gross income is $17,360, they do not qualify for the earned income credit because their total earned income is not less than $32,121.
While most clients will have one or more of the traditional types of retirement assets -- taxable investments, tax-deferred contribution, or tax-advantaged investments that generate tax-free income like Roth IRAs -- the living benefits of IUL policies may provide a supplemental cash source that can help clients enjoy retirement as intended without the worries of impacting modified adjusted gross income, tax brackets, capital gains or access to government programs.
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.
The phase out for the Child Tax Credit begins at a modified adjusted gross income (32) for joint filers at $110,000, single filers and head of household at $75,000, and $55,000 for married filing separately.
The full credit is available to individuals whose modified adjusted gross income is $80,000 or less or $160,000 for married taxpayers.
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.
A Roth IRA offers the following potential advantages: (1) distributions are not required at age 70 1/2; (2) contributions may continue after reaching age 70 1/2; (3) phaseout limits are higher than those for deductible contributions to a Traditional IRA; and (4) tax-free retirement distributions will not push modified adjusted gross income above the threshold that triggers taxation of Social Security benefits (page 435).
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).
The credit will continue to be phased out for high-income taxpayers when modified adjusted gross income exceeds $75,000 for single tax payers and $110,000 for married taxpayers filing a joint return.

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