Modified Adjusted Gross Income - MAGI

AAA

DEFINITION of '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 EXPLAINS 'Modified Adjusted Gross Income - MAGI'

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
  1. Adjusted Gross Income - AGI

    A measure of income used to determine how much of your income ...
  2. Individual Retirement Account - ...

    An investing tool used by individuals to earn and earmark funds ...
  3. Roth IRA

    An individual retirement plan that bears many similarities to ...
  4. Provisional Income

    The level of income that is used to determine whether a taxpayer ...
  5. Gold IRA

    Definition of Gold IRA
  6. Eligible Transfer

    An IRS-allowed movement of assets into or out of an individual ...
Related Articles
  1. Earnings within a Roth IRA are tax free, ...
    Retirement

    Earnings within a Roth IRA are tax free, ...

  2. Can I deduct my Individual Retirement ...
    Taxes

    Can I deduct my Individual Retirement ...

  3. How IRA Contributions Affect Your Taxes
    Retirement

    How IRA Contributions Affect Your Taxes

  4. 4 IRA Changes That Encourage Savings
    Taxes

    4 IRA Changes That Encourage Savings

comments powered by Disqus
Hot Definitions
  1. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  2. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  3. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  4. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  5. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
  6. Limit-On-Open Order - LOO

    A type of limit order to buy or sell shares at the market open if the market price meets the limit condition. This type of ...
Trading Center