You'll need to sign in or create an account to connect with an expert.
Doing an IRA contribution may lower the tax bill but will not change the numbers in qualifying for Earned Income tax credit.
See detail below as the IRA contrbution is added back to the income on the return to get the Modified Adjusted Gross Income (MAGI) For Earned Income Credit.
Your Modified Adjusted Gross Income (MAGI) For Earned Income Credit differs from your AGI in that it may be higher, with certain adjustments added back. (These are the same adjustments that were previously subtracted from your income to arrive at your AGI.) For example, the alimony payments that were subtracted from your income for AGI purposes must be added back to calculate your MAGI.
Some items that can increase your MAGI include the following:
• Tuition-related costs and deductions
• IRA contributions
Doing an IRA contribution may lower the tax bill but will not change the numbers in qualifying for Earned Income tax credit.
See detail below as the IRA contrbution is added back to the income on the return to get the Modified Adjusted Gross Income (MAGI) For Earned Income Credit.
Your Modified Adjusted Gross Income (MAGI) For Earned Income Credit differs from your AGI in that it may be higher, with certain adjustments added back. (These are the same adjustments that were previously subtracted from your income to arrive at your AGI.) For example, the alimony payments that were subtracted from your income for AGI purposes must be added back to calculate your MAGI.
Some items that can increase your MAGI include the following:
• Tuition-related costs and deductions
• IRA contributions
The issue is that both your AGI and your earned income must not be over the threshold. Contributing to an IRA does lower your AGI but it doesn't lower your earned income.
To calculate your modified adjusted gross income, take your AGI and "add-back" certain deductions. Many of these deductions are rare, so it's possible your AGI and MAGI can be identical. Different credit and deductions can have differing add-backs for your MAGI calculation. According to the IRS, your MAGI is your AGI with the addition of the appropriate deductions, potentially including:
Still have questions?
Make a postAsk questions and learn more about your taxes and finances.
5351ea506cfa
New Member
herosareangels
New Member
holdenmetsts
New Member
burner718
Level 2
wufibugs
New Member
Did the information on this page answer your question?
You have clicked a link to a site outside of the TurboTax Community. By clicking "Continue", you will leave the Community and be taken to that site instead.