Modified Adjusted Gross Income (MAGI)

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Definition of 'Modified Adjusted Gross Income (MAGI)'

The Modified Adjusted Gross Income (MAGI) is a key figure used in determining eligibility for a variety of tax benefits and programs, including the American Opportunity Tax Credit, the Lifetime Learning Credit, and the Saver's Credit. MAGI is calculated by taking your Adjusted Gross Income (AGI) and adding back certain deductions, such as student loan interest, tuition and fees, and the domestic production activities deduction.

There are a few important things to keep in mind when calculating your MAGI. First, you must use your MAGI from the tax year in which you are claiming the credit or benefit. Second, you must use all of the same income and deduction items that you used to calculate your AGI. Third, you must use the same filing status that you used to file your tax return.

If you are not sure how to calculate your MAGI, you can use the IRS's MAGI Worksheet. This worksheet will walk you through the process of calculating your MAGI, and it will also help you to identify any deductions that you may be able to claim.

Once you have calculated your MAGI, you can use it to determine your eligibility for various tax benefits and programs. For example, if your MAGI is less than $80,000, you may be eligible for the American Opportunity Tax Credit. If your MAGI is less than $120,000, you may be eligible for the Lifetime Learning Credit. And if your MAGI is less than $25,000, you may be eligible for the Saver's Credit.

The MAGI is a complex figure, but it is important to understand how it is calculated if you want to maximize your tax benefits and take advantage of all of the programs that are available to you.

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