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Technically speaking, it’s ‘modified’ AGI

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in Leaders & Managers,Management Training,Small Business Tax,Small Business Tax Deduction Strategies

Q. In your article on the new stimulus law, you said that the Making Work Pay credit phases out beginning at an AGI of $150,000. Doesn’t it depend on modified AGI? C.U., Manchester, N.H.

Yes. We occasionally receive similar questions about the term “modified adjusted gross income” (MAGI). Small Business Tax Strategies commonly uses adjusted gross income (AGI) as a shorthand term most readers understand, but many tax provisions, including the new Making Work Pay credit, are technically based on MAGI. Generally, MAGI refers to your AGI plus income from outside the United States (plus other add backs in some cases).

Tip: The $150,000 figure you referenced applies to joint filers. The phaseout of the credit begins at $75,000 of MAGI for single taxpayers.

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