What The Heck Is AGIThe taxes you pay to the government and many other things, including the amount you can contribute to a retirement savings plan, all depend on your AGI (Adjusted Gross Income) and your MAGI (Modified Adjusted Gross Income). I know there is a definition on a previous page, but I thought I would try to make it clearer here. If you ad up all of the following: wages, salary, tips, bunuses, interest income, dividends, unemployment compensation, alimony received, capital gains, taxable Ira, pension or annuity withdrawals, any other money that came to you as income you will have the amount of your total income.
From this figure subtract: alimony you paid, moving expenses, deductible Ira contributions, deductible SEP contributions, and any other deductions that the government allows. You now have you AGI(Adjusted Gross Income). MAGI (Modified Adjusted Gross Income) To calculate your MAGI, take your AGI and add to it the following: amounts you claimed for the foreign earned income exlusion, amounts you claimed for foreign housing, money from EE Bonds that you were able to exclude, deductions you took for interest on a student loan or tuition and other such expensed, an excluded employer paid adoption expense and any deduction for a traditional Ira. The total amount is your MAGI Now wasn't that easy? |