Modified adjusted gross income, or MAGI, is one aspect of a person’s income that is calculated while preparing a tax return.The IRS uses MAGI to determine how much of a person’s IRA contributions and tuition can be deducted from taxable income. The greater a person’s MAGI, the greater the chance that some or all of their IRA contribution or tuition will not be deductible. To calculate MAGI, first calculate adjusted gross income, or AGI. AGI is calculated as your gross income from taxable sources minus allowable deductions, such as unreimbursed business expenses, medical expenses, alimony and deductible retirement plan contributions. MAGI is found by taking AGI and adding some deductions back in. These include items such as foreign income, student loan costs, IRA contributions, rental losses and education costs. For specifics, visit the Internal Revenue Service's website. Often, a person’s MAGI can be equal to or very close to their AGI, because they have few or none of these deductions to add back in to modify their adjusted gross income. However, small differences between AGI and MAGI can sometimes make a difference in IRA or tuition deductibility. For example, Lisa has an employer sponsored retirement plan. Her AGI is $64,000, and her MAGI is $69,000. This could affect how much of her $5000 IRA contribution she can deduct from her taxes.