Modified Adjusted Gross Income
Modified Adjusted Gross Income (MAGI) is a calculation that starts with one's Adjusted Gross Income and then applies various modifications to that amount.
There are multiple versions of MAGI, and one should take care to use the applicable modifications.
MAGI for Affordable Care Act purposes
See "What to include as income". See what’s included in MAGI and how to estimate it: HealthCare.gov. 2019. https://www.healthcare.gov/income-and-household-information/income/#magi.
MAGI for child tax credit / credit for other dependents
Child Tax Credit (CTC), Credit for Other dependents (ODC). See "Publication 17, Your Federal Income Tax". 32. Child Tax Credit/Credit for Other Dependents: Internal Revenue Service. 2019. https://www.irs.gov/publications/p17#en_US_2019_publink1000174526.
MAGI for education credit purposes
See "Education Credits: Questions and Answers". Q13. What is "modified adjusted gross income" for the purpose of the AOTC?: Internal Revenue Service. February 8, 2019. https://www.irs.gov/credits-deductions/individuals/education-credits-questions-and-answers.
MAGI for traditional IRA purposes
See "Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs)". Modified adjusted gross income (AGI).: Internal Revenue Service. 2019. https://www.irs.gov/publications/p590a#en_US_2019_publink1000230489.
MAGI for Roth IRA purposes
See "Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs)". Modified AGI.: Internal Revenue Service. 2019. https://www.irs.gov/publications/p590a#en_US_2019_publink1000230985.
MAGI for net investment income tax
See Form 8960 "Net Investment Income Tax—Individuals, Estates, and Trusts". Line 13—Modified Adjusted Gross Income (MAGI): Internal Revenue Service. 2019. https://www.irs.gov/instructions/i8960#idm139700582645360.
MAGI for premium tax credit
See "Questions and Answers on the Premium Tax Credit". 8. What is household income?: Internal Revenue Service. Feb 08, 2019. https://www.irs.gov/affordable-care-act/individuals-and-families/questions-and-answers-on-the-premium-tax-credit.
MAGI for rental passive loss allowance
MAGI for student loan interest deductibility
See "Publication 970, Tax Benefits for Education". Modified adjusted gross income (MAGI).: Internal Revenue Service. 2019. https://www.irs.gov/publications/p970#en_US_2019_publink1000204395.
MAGI for Medicare premiums (IRMAA tiers)
This MAGI is defined in 42 U.S.C. 1395r(i)(4), from the Social Security Act §1839:
(4) Modified adjusted gross income.
(A) In general.—For purposes of this subsection, the term “modified adjusted gross income” means adjusted gross income (as defined in section 62 of the Internal Revenue Code of 1986)—
(i) determined without regard to sections 135, 911, 931, and 933 of such Code; and
(ii) increased by the amount of interest received or accrued during the taxable year which is exempt from tax under such Code.
The words "determined without regard to" mean that any income not included in Form 1040 Adjusted Gross Income (AGI) due to those code sections must be added to AGI to calculate MAGI for the IRMAA tiers.
26 U.S. Code § 135 refers to income from U.S. savings bonds used to pay higher education tuition and fees.
26 U.S. Code § 911 refers to income from citizens or residents of the United States living abroad.
26 U.S. Code § 931 refers to income from sources within Guam, American Samoa, or the Northern Mariana Islands.
26 U.S. Code § 933 refers to income from sources within Puerto Rico.
Many web sites have incomplete information about this MAGI. For example, "Medicare Premiums: Rules For Higher-Income Beneficiaries". Social Security Administration. 2020. https://www.ssa.gov/benefits/medicare/medicare-premiums.html. mentions the tax-exempt interest but neglects to mention the necessary addition of the foreign items or income from US Savings bonds used to pay higher education tuition and fees.
The untaxed portion of Social Security benefits is not included in the MAGI calculation for IRMAA.
- What Is Modified Adjusted Gross Income?, H&R Block
- "The Use of Modified Adjusted Gross Income (MAGI) in Federal Health Programs". Congressional Research Service. 2018. https://crsreports.congress.gov/product/pdf/R/R43861/11.
- Investopedia, Modified Adjusted Gross Income (MAGI) Definition