What is MAGI and how is it calculated?
If your only income is a normal paycheck from your employer, it will be your gross income on that check, multiplied out for the whole year. If you have income from other sources, such as alimony, rental income, or retirement income, that is also included. If your income is stable from year to year, the easiest way to calculate your MAGI is by using your most recent tax return.
Modified Adjusted Gross Income is basically your income before taxes are taken out, but after most Income included in MAGI (not an exhaustive list):
- Adjusted gross income from job or self-employment
- Rental income
- Dividends, IRA distributions, Pensions, Social Security income
- Unemployment, Alimony
- Some items that are deducted from your AGI (line 37) must be added back in to get your MAGI:
- Tax exempt interest (line 8b)
- Non-taxable social security (line 20a)
- Untaxed foreign income