topic I earned too much to qualify for earned income credit. can I qualify for it if I contribute to my IRA? in Retirement tax questions

I earned too much to qualify for earned income credit. can I qualify for it if I contribute to my IRA?

brianna1960 — Sat, 01 Jun 2019 04:55:15 GMT

Doing an IRA contribution may lower the tax bill but will...

MichaelL1 — Sat, 01 Jun 2019 04:55:17 GMT

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

Re: Doing an IRA contribution may lower the tax bill but will...

Larry A — Sun, 14 Mar 2021 18:15:11 GMT

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.

Re: Doing an IRA contribution may lower the tax bill but will...

MichaelL1 — Sun, 14 Mar 2021 18:08:29 GMT

MAGI calculation

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:

Student loan interest
One-half of self-employment tax
Qualified tuition expenses
Tuition and fees deduction
Passive loss or passive income
IRA contributions
Non-taxable social security payments
The exclusion for income from U.S. savings bonds
Foreign earned income exclusion
Foreign housing exclusion or deduction
The exclusion under 137 for adoption expenses
Rental losses
Any overall loss from a publicly traded partnership