Question on Calculating Modified Adjusted Gross Income

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hirlaw
Posts: 464
Joined: Tue Sep 29, 2009 10:20 am

Question on Calculating Modified Adjusted Gross Income

Post by hirlaw »

Hi All! I am trying to estimate this year's Modified Adjusted Gross Income for IRMAA purposes.

Here is my question as an example: Suppose you sell shares in Widget Corp for a $5,000 long term gain. Then you sell shares in Acme Corp for a $3,000 loss. I understand being able to deduct the loss from the gain. However, for MAGI purposes, is the entire $5,000 used or just the $2,000 net gain?

Thanks
sycamore
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Joined: Tue May 08, 2018 12:06 pm

Re: Question on Calculating Modified Adjusted Gross Income

Post by sycamore »

hirlaw wrote: Thu Feb 11, 2021 9:59 am Hi All! I am trying to estimate this year's Modified Adjusted Gross Income for IRMAA purposes.

Here is my question as an example: Suppose you sell shares in Widget Corp for a $5,000 long term gain. Then you sell shares in Acme Corp for a $3,000 loss. I understand being able to deduct the loss from the gain. However, for MAGI purposes, is the entire $5,000 used or just the $2,000 net gain?

Thanks
It's the $2,000 net gain.

In general, it helps to look at the actual 1040 form. Adjusted Gross Income flows from Total Income which includes Line 7 which is the net capital gain or loss.

And MAGI flows from AGI. Look up your particular MAGI (MAGI for IRMAA) on the BH wiki or other source, and it doesn't say to add in losses to get MAGI for IRMAA.
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grabiner
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Re: Question on Calculating Modified Adjusted Gross Income

Post by grabiner »

sycamore wrote: Thu Feb 11, 2021 10:20 am
hirlaw wrote: Thu Feb 11, 2021 9:59 am Hi All! I am trying to estimate this year's Modified Adjusted Gross Income for IRMAA purposes.

Here is my question as an example: Suppose you sell shares in Widget Corp for a $5,000 long term gain. Then you sell shares in Acme Corp for a $3,000 loss. I understand being able to deduct the loss from the gain. However, for MAGI purposes, is the entire $5,000 used or just the $2,000 net gain?

Thanks
It's the $2,000 net gain.

In general, it helps to look at the actual 1040 form. Adjusted Gross Income flows from Total Income which includes Line 7 which is the net capital gain or loss.

And MAGI flows from AGI. Look up your particular MAGI (MAGI for IRMAA) on the BH wiki or other source, and it doesn't say to add in losses to get MAGI for IRMAA.
And the Total Income is the income as reported on the tax form. If you have no capital gain and a $6K capital loss, this reduces your Adjusted Gross Income by only $3K, which is the maximum loss you can deduct in one year; you can deduct the other $3K in the next year even if you don't have any more capital losses.
Wiki David Grabiner
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