1. What is MAGI for Roth IRA?

Modified Adjusted Gross Income (MAGI) is used to determine eligibility for Roth IRA contributions and other tax benefits. It's calculated by taking your Adjusted Gross Income (AGI) and adding back certain deductions.

2. How Does the Calculator Work?

The calculator uses the MAGI formula:

Where:

• \( AGI \) — Adjusted Gross Income from your tax return
• \( IRA\ Deductions \) — Traditional IRA contributions you deducted
• \( Student\ Loan\ Interest \) — Interest you deducted on student loans
• \( Tuition\ Deductions \) — Qualified tuition and fees deduction
• \( Foreign\ Income\ Exclusions \) — Foreign earned income or housing exclusions

Explanation: The IRS adds back these deductions to your AGI to calculate your MAGI for Roth IRA contribution limits.

3. Importance of MAGI Calculation

Details: Your MAGI determines whether you can contribute to a Roth IRA and how much you can contribute. For 2023, the phase-out range is $138,000-$153,000 for single filers and $218,000-$228,000 for married filing jointly.

4. Using the Calculator

Tips: Enter your AGI from your tax return and any applicable deductions that need to be added back. All values should be in dollars.

5. Frequently Asked Questions (FAQ)

Q1: Where do I find my AGI?
A: Your AGI is on line 11 of your 2022 Form 1040 (or line 8b of 2021 Form 1040).

Q2: Are all these add-backs always required?
A: It depends on your specific situation. Most people only need to add back IRA deductions and student loan interest.

Q3: Does MAGI include standard deduction?
A: No, MAGI is calculated before subtracting either the standard or itemized deductions.

Q4: How often does MAGI change?
A: The IRS adjusts the Roth IRA income limits (based on MAGI) annually for inflation.

Q5: Can I reduce my MAGI?
A: You can reduce MAGI by contributing to pre-tax retirement accounts (like a 401(k)) or through health savings account (HSA) contributions.