@Carl Thank you! Your explanation was very thorough. I do have a follow-up question regarding the $25,000 allowance. I read online that you can apply passive losses up to the $25k amount as long as your MAGI is $100k or less. Any income amount up to $150k will be prorated from the $25k allowance. My question is: how do you calculate MAGI? I read a couple articles and videos online and saw you have to include passive income or passive loss into the calculation. Does that mean I have to include all of my passive rental income and all of my passive loss? So from my previous example, would that $10,000 be reduced from my gross income? Or how would you calculate MAGI?
Thank you!
