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Updated for Tax Year 2022 • October 18, 2022 10:09 AM OVERVIEW Your adjusted gross income, or AGI, is an important line item on your taxes, as it affects your eligibility for certain tax benefits. The same is true of your modified adjusted gross income, or MAGI. For information on the third coronavirus relief package, please visit our “American Rescue Plan: What Does it Mean for You and a Third Stimulus Check” blog post. AGI vs. MAGITypically, your MAGI (modified adjusted gross income) and AGI (adjusted gross income) are close in value to one another. However, the small adjustments that tweak your AGI into your MAGI could have an important bearing on your overall tax return. AGI calculationYour adjusted gross income is all of the income you bring in, minus certain adjustments. You can find the allowable reductions to your income on the front page of your Form 1040. Commonly used adjustments include the following:
Other adjustments used in calculating AGI include the following:
MAGI calculationTo calculate your modified adjusted gross income, take your AGI and "add-back" certain deductions. Many of these deductions can be 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:
MAGI effects on your taxesYour MAGI is used as a basis for determining whether you qualify for certain tax deductions. One of the most notable is in determining whether or not your contributions to an individual retirement plan are deductible. For example, as of 2022, if you were a single filer and covered by a retirement plan at work, you couldn't take an IRA deduction if you had an MAGI of $78,000 or higher. You also couldn't take a deduction for student loan interest in 2022 if you had a MAGI of $85,000 or higher filing as single, or $175,000 if married and filing jointly. Remember, with TurboTax, we'll ask you simple questions about your life and help you fill out all the right tax forms. With TurboTax you can be confident your taxes are done right, from simple to complex tax returns, no matter what your situation. All you need to know is yourselfAnswer simple questions about your life and TurboTax Free Edition will take care of the rest. For simple tax returns only Real tax experts on demand with TurboTax Live BasicGet unlimited advice and an expert final review. Done right, guaranteed. For simple tax returns only
The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business. How do I calculate my modified adjusted gross income?To find your MAGI, take your AGI and add back: Any deductions you took for IRA contributions and taxable Social Security payments. Deductions you took for student loan interest. Tuition and fees deduction.
How do you calculate modified adjusted gross income for Irmaa?Your MAGI for Medicare Part B is the sum of (a) your AGI plus (b) tax-exempt interest income (line 2a on IRS Form 1040). Examples of tax-exempt interest income include income from municipal bonds and income producing assets inside a Roth retirement account. In 2022, the standard Medicare Part B premium is $170.10.
What deductions are included in modified adjusted gross income?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.. What is modified adjusted gross income for Social Security purposes?Your MAGI is your total adjusted gross income and tax-exempt interest income. If you file your taxes as “married, filing jointly” and your MAGI is greater than $182,000, you'll pay higher premiums for your Part B and Medicare prescription drug coverage.
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