How do I estimate my Modified Adjusted Gross Income (MAGI)...?

I will earn about $164,000 this year.  I will contribute about $7,000 to my traditional 403(b) and about $10,000 to my ROTH 403(b).

I am divorced and have one minor child dependent.

I'm trying to figure out if my MAGI will be less than $139,000 so that I can contribute to my ROTH IRA.  I will not itemize, as I currently rent and have no real deductions to list.

Thanks for the help!!!!  I could not find a good calculator/estimator.

3 Answers

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  • danxp2
    Lv 6
    6 months ago
    Favorite Answer

    What Is Modified Adjusted Gross Income (MAGI)?

    Modified adjusted gross income (MAGI) is an important number. First of all, it determines whether you can contribute to a Roth IRA and if you can deduct IRA contributions. It also factors into your eligibility for certain education tax benefits and income tax credits. Furthermore, it establishes your eligibility for income-based Medicaid and subsidized health insurance plans on the Health Insurance Marketplace.

    Still, as important as this number is, you won’t find it on your tax return. You’ll have to crunch some numbers to find your MAGI.

    How Modified Adjusted Gross Income Works

    Determining your MAGI is a three-step process:

    1 Figure your gross income for the year.

    2 Calculate your adjusted gross income (AGI).

    3 Add back certain deductions to find your MAGI.

    Figure Your Gross Income

    Your gross income includes everything you earned during the year from:

    Alimony

    Business income

    Capital gains

    Dividends

    Interest

    Farm income

    Rental and royalty income

    Retirement income

    Tips

    Wages

    Note: There are two scenarios in which alimony payments are not considered gross income. The first is if your divorce agreement was executed after 2018. The second is if your divorce agreement was executed before 2019, but later modified to expressly state that such payments are not deductible for the payer.

    Your gross income appears on line 7b of Form 1040. 

    Calculate Your AGI (or Find It on Your Tax Return)

    Your adjusted gross income (AGI) is important because it’s the total taxable income calculated before itemized or standard deductions, exemptions, and credits are taken into account. It dictates how you can use various tax credits and exemptions. For example, AGI affects the amount of money you can claim for the child tax credit.

    Your adjusted gross income is equal to your gross income, less certain tax-deductible expenses, including:

    Certain business expenses for performing artists, reservists, and fee-basis government officials

    Educator expenses

    Half of any self-employment taxes

    Health insurance premiums (if you’re self-employed)

    Health savings account (HSA) contributions

    Moving expenses for members of the Armed Forces moving due to active duty

    Penalties on early withdrawal of savings

    Retirement plan contributions (including IRAs and self-employed retirement plan contributions)

    Student loan interest

    Tuition and fees

     You can do the math to figure out your AGI, or you can find it online 8b of Form 1040. 

    Add Back Certain Deductions

    To find your MAGI, take your AGI and add back:

    Any deductions you took for IRA contributions and taxable Social Security payments

    Any deductions you took for student loan interest or tuition

    Excluded foreign income

    Half of your self-employment taxes

    Interest from EE savings bonds used to pay for higher education expenses

    Losses from a publicly-traded partnership

    Passive income or loss

    Qualified tuition expenses

    Rental losses

    The exclusion for adoption expenses

    Many of these deductions are not commonly used, so your MAGI and AGI could be similar or even identical.

    With the information you gave

    At best given the information you shared you are over the 139,000 limit. Nothing you have shared indicates your MAGI or AGI will be less then the 164,000.

    At the very best you are 164,000 - 17,000 if all of your retirement plans are deductible and none of them have to be added back, you are still only at 143,000... which I don’t think you get to subtract your Roth 403(b) contributions anyway. You don’t mention you are self-employed.  No you would not be able to be below the MAGI of 139,000 

  • 6 months ago

    You take what you will earn, add any other income, subtract what you will contribute to the traditional 403(b) (but NOT what you will contribute to IRAs or to Roths) and any other adjustments (except traditional IRA contributions).

  • Joe
    Lv 4
    6 months ago

    you make enough money to ask a more qualified person

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