Deduct Roth Conversions from AGI to find true MAGI?

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scooter101
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Deduct Roth Conversions from AGI to find true MAGI?

Post by scooter101 »

Trying to determine if I have over contributed to my Roth IRA for 2023. Is it true that I should take my AGI and deduct the total amount of any ROTH CONVERSION that I had this year to get my true MAGI, thus allowing me to not be over the MAGI income limit for contributing to a Roth IRA for 2023. Thanks.
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retiredjg
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Re: Deduct Roth Conversions from AGI to find true MAGI?

Post by retiredjg »

Roth conversions do not add to the MAGI for contributions to Roth IRA.

See Worksheet 2-1 in Publication 590A for how to calculate the MAGI for Roth IRA contributions.
HomeStretch
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Re: Deduct Roth Conversions from AGI to find true MAGI?

Post by HomeStretch »

Traditional IRA conversions to Roth IRA are excluded. Traditional 401k conversions to Roth 401k/IRA are not excluded.
Last edited by HomeStretch on Tue Apr 02, 2024 11:20 pm, edited 1 time in total.
Alan S.
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Re: Deduct Roth Conversions from AGI to find true MAGI?

Post by Alan S. »

HomeStretch wrote: Tue Apr 02, 2024 8:09 pm Traditional IRA conversions to Roth IRA are excluded. Traditional 401k conversions to Roth 401k/IRA are not excluded.
Correction:
If the rollover is from any employer retirement plan to a Roth IRA it is excluded, per bolded sentence below:
Worksheet 2-1. Modified Adjusted Gross Income for Roth IRA Purposes
Use this worksheet to figure your modified adjusted gross income for Roth IRA purposes.
1. Enter your adjusted gross income from Form 1040, 1040-SR, or
1040-NR, line 11 ..............................................................
2. Enter any income resulting from the conversion of an IRA (other than a
Roth IRA) to a Roth IRA (included on Form 1040, 1040-SR, or 1040-NR,
line 4b) and a rollover from a qualified retirement plan to a Roth IRA
(included on Form 1040, 1040-SR, or 1040-NR, line 5b) ...................

3. Subtract line 2 from line 1 ............................
........................
HomeStretch
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Re: Deduct Roth Conversions from AGI to find true MAGI?

Post by HomeStretch »

Alan S. wrote: Tue Apr 02, 2024 10:54 pm
HomeStretch wrote: Tue Apr 02, 2024 8:09 pm Traditional IRA conversions to Roth IRA are excluded. Traditional 401k conversions to Roth 401k/IRA are not excluded.
Correction:
If the rollover is from any employer retirement plan to a Roth IRA it is excluded, per bolded sentence below:
Worksheet 2-1. Modified Adjusted Gross Income for Roth IRA Purposes
Use this worksheet to figure your modified adjusted gross income for Roth IRA purposes.
1. Enter your adjusted gross income from Form 1040, 1040-SR, or
1040-NR, line 11 ..............................................................
2. Enter any income resulting from the conversion of an IRA (other than a
Roth IRA) to a Roth IRA (included on Form 1040, 1040-SR, or 1040-NR,
line 4b) and a rollover from a qualified retirement plan to a Roth IRA
(included on Form 1040, 1040-SR, or 1040-NR, line 5b) ...................

3. Subtract line 2 from line 1 ............................
........................
Thank you for the correction. I have been excluding only 1040 line 4b when I do my computation so glad to hear I can also exclude line 5b.
germain
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Re: Deduct Roth Conversions from AGI to find true MAGI?

Post by germain »

Thanks for asking this question, scooter101. As long as I'm understanding the replies here I think I just learned something new that is surprising to me: AGI is uniquely defined in any given tax year but MAGI is not.

Here's the specifics:
I'm using my 2023 tax year app to run a projection for the 2024 tax year where I assume that I make a Roth conversion in 2024. I know that I need to keep the MAGI under the specified maximum in order to also be able to contribute to a Roth in 2024. So I took a look at line #13 on form 8960 where the app has calculated the MAGI for me. But the MAGI on this line clearly includes the Roth conversion dollars. I assumed that this MAGI was the number I had to keep under the specified maximum. However, according to AlanS and retiredjg there is a different MAGI that I need to calculate, one that is specific to Roth contributions and is calculated in a different way. How many different MAGIs are there?

Thanks.
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retiredjg
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Re: Deduct Roth Conversions from AGI to find true MAGI?

Post by retiredjg »

There are a bunch of MAGIs. Here is a list from our Wiki. I don't know if the list is complete or not.

https://www.bogleheads.org/wiki/Modifie ... oss_Income

Looks like the one you are looking at is specifically for the NIIT. It could be different from Roth IRA.
germain
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Re: Deduct Roth Conversions from AGI to find true MAGI?

Post by germain »

Thanks for teaching me something new and useful. I guess I'm learning it when I need it, but it would be nice if the IRS uniquely identified each calculation, say MAGI(ACA), MAGI(Educ), MAGI(Roth), MAGI(tIRA), MAGI(NIIT), and such? I wish the naming convention reflected the calculation.

Does anyone know if MAGI(Roth) can be found on a line in a specific form or worksheet in any of the tax apps?

Thanks.
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Eagle33
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Re: Deduct Roth Conversions from AGI to find true MAGI?

Post by Eagle33 »

germain wrote: Wed Apr 03, 2024 6:18 pm Does anyone know if MAGI(Roth) can be found on a line in a specific form or worksheet in any of the tax apps?
Refer to Worksheet 2-1 "Modified Adjusted Gross Income for Roth IRA Purposes" in Publication 590-A.
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CAsage
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Re: Deduct Roth Conversions from AGI to find true MAGI?

Post by CAsage »

Wow. a topic that is in fact totally new to me! Don't forget the dreaded MAGI(IRMAA) which has got a firm bite on us. Sigh. So much to learn.... And yes, it would make a lot of sense to code these in the IRS world. Now off to study Wiki....
Salvia Clevelandii "Winifred Gilman" my favorite. YMMV; not a professional advisor.
germain
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Re: Deduct Roth Conversions from AGI to find true MAGI?

Post by germain »

Eagle33 wrote: Thu Apr 04, 2024 4:28 pm Refer to Worksheet 2-1 "Modified Adjusted Gross Income for Roth IRA Purposes" in Publication 590-A.
Right, but it'd be nice if I could just find that number on a line on a form in my tax app. For example, MAGI(NIIT) can be found on line #13 on form 8960 in my tax app. It's dead simple to open the form and find the number.
CAsage wrote: Thu Apr 04, 2024 4:35 pm Wow. a topic that is in fact totally new to me! Don't forget the dreaded MAGI(IRMAA) which has got a firm bite on us. Sigh. So much to learn.... And yes, it would make a lot of sense to code these in the IRS world. Now off to study Wiki....
I'm glad to hear that I'm not the only one who didn't know this.
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Eagle33
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Re: Deduct Roth Conversions from AGI to find true MAGI?

Post by Eagle33 »

germain wrote: Thu Apr 04, 2024 6:21 pm
Eagle33 wrote: ↑
Refer to Worksheet 2-1 "Modified Adjusted Gross Income for Roth IRA Purposes" in Publication 590-A.
Right, but it'd be nice if I could just find that number on a line on a form in my tax app. For example, MAGI(NIIT) can be found on line #13 on form 8960 in my tax app. It's dead simple to open the form and find the number.
Did you try to look for the worksheet in your tax app? It ma be hidden somewhere.
germain
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Re: Deduct Roth Conversions from AGI to find true MAGI?

Post by germain »

Eagle33 wrote: Fri Apr 05, 2024 12:40 pm Did you try to look for the worksheet in your tax app? It ma be hidden somewhere.
Yes. The closest thing I can find to MAGI(Roth) in the H&RBlock app is on something called the IRA contribution worksheet. On this worksheet there is a section called Maximum Roth Contribution with a line item that is described as "MAGI before any IRA". This H&RBlock line item bears a similarity to the Worksheet 2-1 calculation from IRS publication 590-A but it is not identical.

Pub 590A/worksheet 2-1 adds in 1040/Schedule 1 lines 20 and 21 to produce MAGI(Roth). These lines are not included in the H&RBlock IRA worksheet calculation.

H&RBlock IRA worksheet subtracts 1040/Schedule 1 lines 11-19a,23,25 to produce what they call "MAGI before any IRA". These line items are not included in the calculation in Pub 590A/worksheet 2-1.
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