topic will contributing traditional ira lowers magi for california medical? in Retirement tax questions

will contributing traditional ira lowers magi for california medical?

mokbaegae — Sat, 15 Feb 2025 02:00:57 GMT

Re: will contributing traditional ira lowers magi for california medical?

MonikaK1 — Sat, 22 Feb 2025 19:06:24 GMT

No. Deductible IRA contributions lower your AGI but are added back for MAGI.

If your Traditional IRA contributions were deductible (reducing your Adjusted Gross Income) on your Federal return, they will also be deductible for your California return. They are then added back to MAGI for both your Federal and California return for certain purposes including Marketplace insurance. California follows Federal rules for this purpose, so though you do receive a deduction from income for contributing to an IRA, the deduction is added back for California as well as Federal for that purpose. See this California Healthcare Foundation webpage for more information.

Your Federal Adjusted Gross Income flows through to your California return. Review Schedule CA on your California return. This form lists any differences between your Federal and California income.

See this TurboTax tips article for more information about the difference between AGI and MAGI.

Re: will contributing traditional ira lowers magi for california medical?

mokbaegae — Sat, 22 Feb 2025 20:55:43 GMT

https://www.healthcare.gov/reporting-deductions/

this website says IRA contribution can deduct income for health insurance. i am confused.

Re: will contributing traditional ira lowers magi for california medical?

MonikaK1 — Tue, 25 Feb 2025 01:12:10 GMT

There are different definitions of MAGI for different purposes. I just checked this IRS webpage and it clarifies the differences, and that for purposes of the Premium Tax Credit, to calculate MAGI:

Take your AGI and add:

Foreign earned income
Tax-exempt interest
Your nontaxable Social Security benefits

So, the source you cited is correct and your IRA deductions do lower your MAGI. My apologies for the confusion.

@mokbaegae