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robertshanebrook
Returning Member

Modified Adjusted Gross Income: multiple definitions make it confusing.

There are multiple  definitions  for Modified Adjusted Gross Income.  Is this true? 

 

It is  really  modified ADJUSTED GROSS INCOME.   The  AGI  is   specifically   calculated then the modification is  calculated  in  different  ways  depending on  the application.  Roth IRA  contribution is one  application and Social Security Medicare IRMAA  is a totally  different application  so  takes  different   factors into  account.    Both are used by  those that receive Social Security.   Very  confusing.   

 

Social Security Administration   definition  of modified AGI: 

Social Security Handbook  2501.  https://www.ssa.gov/OP_Home/handbook/handbook.25/handbook-2501.html

What is Modified Adjusted Gross Income (MAGI)?

Modified Adjusted Gross Income is the sum of:  The beneficiary's adjusted gross income (AGI) (last line of page 1 of the IRS Form 1040 (U.S. Individual Income Tax Return)), plus   Tax-exempt interest income (line 8b of IRS Form 1040)

How Is MAGI Used?

MAGI is used to determine if an Income-Related Monthly Adjustment Amount (IRMAA) applies. It is provided by IRS and is generally information that is two years prior (but not more than 3 years prior) to the year for which the premium is being determined. We will use the appropriate sliding scale table IRA  (2503) to determine the IRMAA.

 

Internal Revenue  Service  definition  of modified AGI: (also used in  TurboTax) 

 The IRS  uses  modified AGI  to determine IRA  contributions.  See IRS  publication  590-A page  53.  The  calculation  uses  AGI    and SSA-1099.  No  mention of  Tax-exempt  income. 

 

 IRS and SSA    both  use  the  term:  "Modified Adjusted Gross Income"   but  are calculated differently  and  result in  different  values.   I have two  very  different Modified Adjusted  Gross Income  values. 

 

 

 

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2 Replies

Modified Adjusted Gross Income: multiple definitions make it confusing.

Yes there are several different MAGI for different things.

rjs
Level 15
Level 15

Modified Adjusted Gross Income: multiple definitions make it confusing.


@robertshanebrook wrote:

There are multiple  definitions  for Modified Adjusted Gross Income.  Is this true?


Yes, it's true. And there are more definitions than you seem to have realized. There isn't just one IRS definition of MAGI. The IRS has about ten different definitions of MAGI for different purposes, all related to income tax.

 

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