🧾 What is MAGI?
MAGI stands for Modified Adjusted Gross Income. It starts with your Adjusted Gross Income (AGI) and then adds back certain deductions like student loan interest, IRA contributions, and foreign income exclusions.
It’s a key figure the IRS uses to determine whether you're eligible for:
- Roth IRA contributions
- Premium tax credits
- Student loan interest deductions
- Education-related tax benefits
- Traditional IRA deductibility (if you have a workplace retirement plan)
🧮 How to Calculate MAGI
Here’s a simplified version of the formula:
MAGI = AGI + tax-exempt interest + excluded foreign income + non-taxable Social Security benefits + student loan interest deduction + tuition and fees deduction + IRA contributions (if deductible)
Your AGI can be found on Line 11 of IRS Form 1040.
🎯 Why MAGI Matters
Your MAGI impacts your tax benefits. For example:
- If your MAGI is too high, you may not be allowed to contribute to a Roth IRA.
- MAGI also determines your eligibility for premium tax credits under the Affordable Care Act.
- Many income-based phaseouts and limits are tied to MAGI, not just gross income.
📌 Pro Tip
MAGI is not listed explicitly on your tax return—you’ll need to calculate it manually (or use a calculator like this one 😄).