1. What is MAGI?

Modified Adjusted Gross Income (MAGI) is your Adjusted Gross Income (AGI) plus certain deductions and tax-exempt interest. It's used to determine eligibility for various tax benefits, credits, and government programs.

2. How Does the Calculator Work?

The calculator uses the MAGI formula:

Where:

• \( AGI \) — Adjusted Gross Income from your tax return
• \( Nontaxable\ Interest \) — Tax-exempt interest income
• \( Deductions \) — Certain deductions added back to AGI

Explanation: The formula adjusts your AGI by adding back certain items that were excluded or deducted to determine your true income level for program eligibility purposes.

3. Importance of MAGI Calculation

Details: MAGI is crucial for determining eligibility for premium tax credits under the Affordable Care Act, Roth IRA contributions, student loan interest deductions, and various other tax benefits and government programs.

4. Using the Calculator

Tips: Enter your AGI from your tax return, any nontaxable interest income, and applicable deductions. All values must be non-negative dollar amounts.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between AGI and MAGI?
A: AGI is your gross income minus certain adjustments. MAGI adds back certain deductions and exclusions to better reflect your true income level.

Q2: What deductions are typically added back?
A: Common additions include student loan interest, tuition/fees deduction, foreign earned income exclusion, and retirement contributions.

Q3: Why is MAGI important for health insurance?
A: MAGI determines eligibility for Medicaid and premium tax credits under the Affordable Care Act marketplace plans.

Q4: Does MAGI include Social Security benefits?
A: Only taxable Social Security benefits are included in MAGI. Non-taxable benefits are not included.

Q5: How often should I calculate my MAGI?
A: You should calculate it annually when preparing your taxes and whenever applying for programs that use MAGI for eligibility.