How to Calculate Modified AGI

AGI vs. Modified AGI

Before we delve into how to calculate your modified adjusted gross income (MAGI), let's discuss the difference between MAGI and regular adjusted gross income (AGI).

Your AGI, as opposed to your total gross income, can affect any tax deductions and credits for which you may be eligible -- and thus reduce your amount of taxable income. Here's how you calculate your AGI.

  • Use Form 1040 to take advantage of all possible deductions and adjustments
  • Report all your taxable income, including job earnings, income from alimony, or any bank account interest
  • Subtract any deductions or adjustments for which you are eligible (things like alimony payments, education expenses and student loans)

This is your adjusted gross income. Your MAGI, on the other hand, is almost like going in reverse. Calculating your MAGI takes some of those deductions away. The IRS starts to phase out certain deductions and credits as your income increases, which is why we have the MAGI. When you add these back into the total, the IRS gets a more accurate account of what you truly earned over the past year.

However, there are only certain circumstances when your AGI and MAGI will wildly differ -- in most cases, these numbers will be close. Find out when they will differ on the next page.