MAGI is short for modified adjusted gross income.
It can be defined as your household’s adjusted gross income with any tax-exempt interest income and certain deductions added back.
MAGI is an important calculation when determining whether or not you qualify for a number of tax credits, benefits, and exclusions making it ever important for tax purposes.
Formula to calculate MAGI.
Suppose a firm’s AGI is $700,000, if the non taxable social security is $40,000, calculate the MAGI if the tax exempt interest was $ 70,000.
In this instance, there is the absence of excluded foreign income, thus we will use what has been given.
Therefore, the firm’s MAGI is $ 810,000.