Definition
Modified adjusted gross income is your AGI with certain deductions and exclusions added back, used to determine eligibility for specific tax benefits.
How It Works
Different tax provisions define MAGI slightly differently, adding back items such as foreign earned income exclusions, certain deductions, or tax-exempt interest. The resulting figure is used to test eligibility for things like Roth IRA contributions, the Net Investment Income Tax, and certain credits.
Example
A taxpayer whose AGI qualifies them for a Roth contribution may find that adding back tax-exempt interest pushes their MAGI over the limit.
Who It Applies To
Taxpayers near the income thresholds for credits, Roth contributions, or the NIIT.
Watch-Outs
Because MAGI is defined differently for different provisions, a number that qualifies you for one benefit may disqualify you for another.
