We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.
Finance

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What is a Modified Adjusted Gross Income?

Mary McMahon
By
Updated: May 17, 2024
Views: 6,367
Share

The modified adjusted gross income (MAGI) is someone's gross income, adjusted with the assistance of a series of deductions. This number is used to determine eligibility for certain tax deductions and other benefits. It is not the same thing as the adjusted gross income (AGI), the number used to determine tax liability. Typically the modified adjusted gross income is lower than the person's gross income, but higher than the adjusted gross income.

To determine adjusted gross income, taxpayers record the amount of money they earned over the last year, and then they take a series of deductions. Allowable deductions vary, but typically include a standard deduction, certain types of expenses, and so forth. To find modified adjusted gross income, some of these allowable deductions, such as deductions for student loan interest or deductions for contributions to retirement accounts, are added back in to arrive at a new number.

One way in which the modified adjusted gross income is used is to determine what percentage of contributions to an individual retirement account (IRA) qualify as tax deductions. The higher the modified adjusted gross income, the lower the percentage of deductible contributions. In some cases people may not receive any tax benefits at all for such contributions, while others may find that some, but not all, of their contributions are tax deductible.

The rules for determining modified adjusted gross income can vary, depending on the purpose for which someone is finding his or her modified adjusted gross income. An experienced accountant will be familiar with the rules for a wide variety of situations and can calculate this number accurately. People who prepare their own taxes should take care to read the instructions thoroughly and to check their work when they are finished to confirm that the number is accurate. Mistakes can result in needing to refile tax forms and can arouse suspicions which may result in an audit.

The tax code can be byzantine, and it is important to be aware that it also changes from year to year. It is critical to work with tax forms and documents which are appropriate for the year in which taxes are being filed and to take note of changes which may affect issues such as allowable deductions. With modified adjusted gross income, for example, the cutoffs for various deductions may shift from year to year in response to inflation, shifting approaches to tax policy, and other factors.

Share
WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a WiseGeek researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Editors' Picks

Discussion Comments
Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

Learn more
Share
https://www.wisegeek.net/what-is-a-modified-adjusted-gross-income.htm
Copy this link
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.