MAGI question

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Topic Author
atl2005
Posts: 537
Joined: Wed May 15, 2013 4:34 pm

MAGI question

Post by atl2005 »

I'm trying to determine if my wife and I can contribute to our Roth IRA for 2013, but always wait to see what our income total is as mine differs each year. This year our total income before any deductions was 185,700. How do I go about calculating my Modified Adjusted Gross to determine if I fall below the phase out range for Roth IRA? Thanks. (we both maxed out our 401k this year if that helps)
Yeti
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Re: MAGI question

Post by Yeti »

Hi ugaDAWGS,

From the IRS website:

MAGI when using Form 1040. If you file Form 1040, your MAGI is the AGI on line 38 of that form figured without taking into account any savings bond interest exclusion and modified by adding back any:

Foreign earned income exclusion,

Foreign housing exclusion,

Foreign housing deduction,

Exclusion of income by bona fide residents of American Samoa,

Exclusion of income by bona fide residents of Puerto Rico,

Exclusion for adoption benefits received under an employer's adoption assistance program,

Deduction for student loan interest,

Deduction for tuition and fees, and

Deduction for domestic production activities.

Use the worksheet in the instructions for line 9 of Form 8815 to figure your MAGI. If you claim any of the exclusion or deduction items (1)–(6) listed above, add the amount of the exclusion or deduction to the amount on line 5 of the worksheet. Do not add in the deduction for (7) student loan interest, and (8) tuition and fees, or (9) domestic production activities because line 4 of the worksheet already includes these amounts. Enter the total on Form 8815, line 9, as your modified adjusted gross income (MAGI).
niceguy7376
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Location: Metro ATL

Re: MAGI question

Post by niceguy7376 »

Let me give an example at a basic level:
Income - 185K
401K contributions = 2*17500 = 35K
FSA Contributions = ???
Pre-tax health contributions = Your out of pocket health premiums deducted on your paychecks = ???

MAGI would be 185K-35K - the other two values.
Use that value for ROTH phase out tables
Topic Author
atl2005
Posts: 537
Joined: Wed May 15, 2013 4:34 pm

Re: MAGI question

Post by atl2005 »

Thanks a lot, I knew if I could subtract my 401k deductions I would be below the phase out range.
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C8H18Engineer
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Re: MAGI question

Post by C8H18Engineer »

Considering the typical accumulation-phase person, just to clarify the "income" element, which of the following are included:

1. wages tips
2. long term capital gains
3. short term capital gains
4. qualified dividends
5. ordinary dividends
6. interest in taxable accounts (CD, bank, etc)
7. tax exempt interest and dividends
8. other?
niceguy7376
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Location: Metro ATL

Re: MAGI question

Post by niceguy7376 »

Take 1040 as example. MAGI is the last line in the first page.
Providing the Line item numbers of the 1040 for each of the below. Taking a shot at it. I WILL be wrong in atleast some of them.

1. wages tips - Col 7
2. long term capital gains - Col 13??
3. short term capital gains - Col 13??
4. qualified dividends - 9b
5. ordinary dividends - 9a
6. interest in taxable accounts (CD, bank, etc) - 8a
7. tax exempt interest and dividends - 8b
8. other?
amfox1
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Joined: Wed Mar 09, 2011 8:54 pm

Re: MAGI question

Post by amfox1 »

C8H18Engineer wrote:Considering the typical accumulation-phase person, just to clarify the "income" element, which of the following are included:

1. wages tips
2. long term capital gains
3. short term capital gains
4. qualified dividends
5. ordinary dividends
6. interest in taxable accounts (CD, bank, etc)
7. tax exempt interest and dividends
8. other?
Use this worksheet to figure your modified adjusted gross income for Roth IRA purposes.

1. Enter your adjusted gross income from Form 1040, line 38; Form 1040A, line 22; or Form 1040NR, line 37
2. Enter any income resulting from the conversion of an IRA (other than a Roth IRA) to a Roth IRA (included on Form 1040, line 15b, Form 1040A, line 11b, or Form 1040NR, line 16b) and a rollover from a qualified retirement plan to a Roth IRA (included on Form 1040, line 16b, Form 1040A, line 12b, or Form 1040NR, line 17b)
3. Subtract line 2 from line 1
4. Enter any traditional IRA deduction from Form 1040, line 32; Form 1040A, line 17; or Form 1040NR, line 32
5. Enter any student loan interest deduction from Form 1040, line 33; Form 1040A, line 18; or Form 1040NR, line 33
6. Enter any tuition and fees deduction from Form 1040, line 34, or Form 1040A, line 19
7. Enter any domestic production activities deduction from Form 1040, line 35, or Form 1040NR, line 34
8. Enter any foreign earned income exclusion and/or housing exclusion from Form 2555, line 45, or Form 2555-EZ, line 18
9. Enter any foreign housing deduction from Form 2555, line 50
10. Enter any excludable qualified savings bond interest from Form 8815, line 14
11. Enter any excluded employer-provided adoption benefits from Form 8839, line 28
12. Add the amounts on lines 3 through 11

***

Note that the add-back for tax-exempt interest is limited to "qualified savings bond interest", not all tax-exempt interest and dividends.
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abuss368
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Re: MAGI question

Post by abuss368 »

MAGI can be different for each type of tax issue. There is no one definition of MAGI. It essentially means the taxpayer starts with AGI and then adjusts (depending on the specific area) for certain items.
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