{"id":53698,"date":"2023-01-20T00:04:00","date_gmt":"2023-01-20T00:04:00","guid":{"rendered":"https:\/\/businessyield.com\/?p=53698"},"modified":"2023-02-11T14:11:41","modified_gmt":"2023-02-11T14:11:41","slug":"modified-adjusted-gross-income-magi","status":"publish","type":"post","link":"https:\/\/businessyield.com\/family-helping\/modified-adjusted-gross-income-magi\/","title":{"rendered":"MODIFIED ADJUSTED GROSS INCOME (MAGI): How To Calculate It","gt_translate_keys":[{"key":"rendered","format":"text"}]},"content":{"rendered":"

Basically, there are a number of tax breaks for which you are eligible, and you can determine this using your modified adjusted gross income. The way your modified adjusted gross income (MAGI) will be calculated will vary depending on the tax credit or government program for which you are applying. In order to be able to claim all the tax advantages for which you are qualified, you will need a basic understanding of how MAGI works. You also need to have a clear-cut understanding of the disparity between AGI and MAGI (Adjusted Gross Income vs. Modified Gross Adjusted Income) as well as how the notion affects medicare.<\/p>

Read Also:<\/em><\/strong> EARNED INCOME CREDIT (EIC): How It Works<\/a><\/p>

What Is Modified Adjusted Gross Income?<\/span><\/h2>

Your modified adjusted gross income (MAGI) equals the total of your adjusted gross income (AGI), your income from tax-exempt interest, and certain deductions added back. The Internal Revenue Service utilizes your MAGI to determine whether or not you are eligible for certain tax benefits since it can offer a more complete picture of your financial situation.<\/p>

A significant number of taxpayers believe MAGI to be the same as their AGI. However, when computing your MAGI, you will need to add back any non-taxable income sources. This might include Social Security payments, tax-exempt interest, and untaxed overseas income, to the amount that you reported as your AGI.<\/p>

The modified adjusted gross income (MAGI) is used to adjust the adjusted gross income (AGI) for various tax deductions and credits. However, to determine your MAGI, you will need to do some calculations. The tax preparation software will make this process much simpler for you.<\/p>

What income is included in MAGI?<\/span><\/h2>

The modified adjusted gross income (MAGI) is calculated by adding the following to the adjusted gross income (AGI) if any: tax-free interest, non-taxable Social Security benefits, and tax-free overseas income. In many cases, the MAGI is the same as or extremely near to the adjusted gross income. Supplemental Security Income (SSI) is not included in the MAGI calculation.<\/p>

Does MAGI Include Standard Deduction?<\/span><\/h2>

Basically, before a person may claim either the standard deduction or any itemized deductions, they must first determine both MAGI and AGI. These deductions will be factored in at a later time. In the real sense, a taxpayer’s adjusted gross income (AGI) might show how much of certain deductions and credits the person is eligible to claim, such as the child tax credit.<\/p>

What reduces modified adjusted gross income?<\/span><\/h2>

Generally, you can reduce your modified adjusted gross income in a variety of ways including the following:<\/p>