1. What is MAGI for Roth IRA?

Modified Adjusted Gross Income (MAGI) is used to determine eligibility for Roth IRA contributions. 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 — Your Adjusted Gross Income from tax return
• IRA Deductions — Traditional IRA contributions you deducted
• Student Loan Interest — Deducted student loan interest
• Foreign Income Exclusions — Income excluded under foreign earned income exclusion

3. Importance of MAGI Calculation

Details: MAGI determines your eligibility to contribute to a Roth IRA. For 2023, phase-outs begin at $138,000 (single) and $218,000 (married filing jointly).

4. Using the Calculator

Tips: Enter all amounts in dollars. You can find these numbers on your tax return: AGI on line 11 of Form 1040, IRA deductions on line 20, student loan interest on line 21.

5. Frequently Asked Questions (FAQ)

Q1: What other items might be added to AGI for MAGI?
A: Depending on the purpose, MAGI might also include tax-exempt interest, excluded savings bond interest, or excluded employer adoption benefits.

Q2: Are Roth IRA contributions included in MAGI?
A: No, Roth IRA contributions are made with after-tax dollars and don't affect your MAGI calculation.

Q3: How often should I check my MAGI?
A: You should calculate your MAGI annually before making Roth IRA contributions, as income limits are adjusted yearly.

Q4: What if my MAGI exceeds the limit?
A: You may need to reduce or eliminate your Roth IRA contribution, or consider a backdoor Roth IRA strategy.

Q5: Does MAGI affect traditional IRA deductions?
A: Yes, MAGI also determines whether you can deduct traditional IRA contributions if you're covered by a retirement plan at work.