What is a Modified Adjusted Gross Income?

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  • Written By: Mary McMahon
  • Edited By: O. Wallace
  • Last Modified Date: 11 March 2020
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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.



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