MAGI calculation for Roth Contributions

Forum|Forum|3 years ago
February 7, 2023
1 reply
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I own a second single family home that I rent out, from which I have passive rental income.

TurboTax calculated my MAGI in a Mod AGI worksheet that did not include this passive income, which I believe is correct.

However, when I look at the Roth IRA Contribution Limit Worksheet, TurboTax input my AGI as my MAGI on line 1. The AGI includes the passive rental income and therefore puts me over the max income limit to contribute to my Roth IRA.

Is this an error in the software? If so, how do I get TurboTax to use my correct MAGI for the Roth IRA Contribution worksheet?

Best answer by AnnetteB6

Modified AGI has different definitions for different purposes. The Modified AGI worksheet within TurboTax could have been created for something other than to determine Roth IRA contributions.

Take a closer look at that worksheet at the top. There should be a designation showing the purpose of that particular worksheet. For example, it might say Form 8582 Line 7 in the upper left corner of the worksheet which means it was calculated for the purpose of that particular form.

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JulieS

Level 15

Yes, TurboTax is correct. For the purposes of figuring your Roth contribution, line 1 says "Enter your adjusted gross income from Form 1040, 1040-SR, or 1040-NR, line 11". This number would include your passive rental income.

Click here to see the applicable section of Publication 590A.

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need_assistanceAuthor

Level 2

Thank you for your response.

I see that on line 1 of the 2021 Roth IRA Contribution Limit Worksheet instructions, but the 2022 form in TurboTax asks for the "modified adjusted gross income" on line 1. So is the Modified AGI worksheet in TurboTax that I mentioned earlier not applicable when it comes to the ROTH IRA contribution income limit? Was that Modified AGI worksheet completed for another reason?

AnnetteB6Answer

Level 15

Modified AGI has different definitions for different purposes. The Modified AGI worksheet within TurboTax could have been created for something other than to determine Roth IRA contributions.

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