Adjusting MAGI for Student Loan Interest Deduction

[bmwhite83]

Because of a job related relocation, my Modified Adjusted Gross Income has been inflated to include the taxable expenses of the move. A large portion of what artificially increases my MAGI are things like a Lease Cancellation and Temporary Housing, as well as Tax Assistance which is meant to help me pay these taxes. I paid and was reimbursed for the Lease Cancellation, and my company paid for the Temporary Housing, and also correctly withheld the Tax Assistance.

Since these expenses did not actually come to me as income, I believe they should not be increasing my MAGI with regards to determining the Student Loan Interest Deduction eligibility (MAGI must be < $80k). Is it correct that I am now ineligible, or can I adjust my MAGI to more accurately show my income?

[CarolC · Accepted solution]

It is correct.  From the information provided, you are ineligible for the Student Loan Interest Deduction.

When your employer provides a taxable benefit, this benefit is included in your income.  The MAGI calculation cannot be adjusted.  Therefore, as a single taxpayer, if your MAGI is greater than $80,000, then the Student Loan Interest Deduction is eliminated by the phaseout.

MAGI is the adjusted gross income as figured on your federal income tax return before subtracting any deductions.

See the TurboTax FAQ below for additional information.  Click "See entire answer" for the full page view.

https://ttlc.intuit.com/replies/3302319