Q. My accountant occasionally refers to “modified adjusted gross income.” Does that make any real difference in taxes? G.P.S., Park City, Utah
A. It could. The exact definition of “modified adjusted gross income” (MAGI) differs for various tax purposes.
Example: The availability of a Roth IRA is based on a taxpayer’s MAGI. For this particular purpose, the IRS defines MAGI as your regular AGI plus income excluded under provisions for foreign income and foreign housing, exempt Series EE bond interest used to pay for college, interest on student loans, employer-paid adoption expenses and deductions claimed for regular contributions to a traditional IRA.
Tip: The term AGI often is used as shorthand when the rules technically require a MAGI calculation.
- Small Business Tax Deduction Strategies No matches