Hello Turbotax Community!
I am wrapping up taxes for my girlfriend. I am confused with the MAGI calculation. Multiple sources mentioned that passive loss (capital losses?) should be added back to the adjusted gross income (AGI) [see source 1 below]. Does this mean it will "increase" MAGI? For example, say I have an AGI of $100,000, and a capital loss of 3k. Does it mean MAGI = $103,000? In other words MAGI > AGI?
Yet, I have also read that capital losses should REDUCE MAGI. [see source 2 below]. For example, say I have an AGI of $100,000, and a capital loss of 3k. Does it mean MAGI = $97,000? In other words MAGI < AGI?
I am assuming it is the FORMER because AGI includes capital losses already, thus we should be adding it back? So in theory MAGI should usually be higher than AGI? My girlfriend is trying to contribute to her Roth IRA, but is at the threshold so this is critical.
Lastly, would anyone know where I can find a "reduced" ROTH IRA contribution calculator?
Source 1
https://www.thebalance.com/how-to-calculate-your-modified-adjusted-gross-income-4047216
Source 2
https://www.rothira.com/ways-reduce-taxable-income-roth-ira
