Modified Adjusted Gross Income (MAGI)
The amount of income that determines how much of an individual's IRA contribution is deductible. The modified adjusted gross income is found by taking the individual's adjusted gross income and adding back certain items such as foreign income, foreign-housing deductions, student-loan deductions, IRA-contribution deductions and deductions for higher-education costs. Investopedia Says:
The higher the modified adjusted gross income, the more the deductible amount of the IRA contribution will be reduced, possibly going down even to zero. If this happens, one can still contribute to an IRA plan, it's just that the whole amount contributed will not be tax deductible. The amount calculated in MAGI will often be similar or even the same as adjusted gross income. Related Terms:
Adjusted Gross Income - AGI
Deduction
Income Tax
Individual Retirement Account - IRA
Roth IRA
Tax Increase Prevention and Reconciliation Act of 2005 - TIPRA |