Your MAGI is used as a basis for determining whether you qualify for certain tax deductions. One of the most notable is in determining whether or not your contributions to an individual retirement plan are deductible.
To calculate your modified adjusted gross income (MAGI), take your Adjusted Gross Income (AGI) and add back certain deductions.
Many of these deductions are rare, so it's possible your AGI and MAGI can be identical. According to the IRS, your MAGI is your AGI with the addition of the following deductions, if applicable:
- Student loan interest
- One-half of self-employment tax
- Qualified tuition expenses
- Tuition and fees deduction
- Passive loss or passive income
- IRA contributions, taxable social security payments
- The exclusion for income from U.S. savings bonds
- The exclusion under 137 for adoption expenses
- Rental losses
- Any overall loss from a publicly traded partnership
For additional information, please see the following TurboTax article: Difference Between AGI and MAGI on Your Taxes .
Related information: IRS AGI vs MAGI
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