Step 1.  Calculate Your AGI (or Find It on Your Tax Return)

Your adjusted gross income (AGI) is important because it’s the total taxable income calculated before itemized or standard deductions, exemptions, and credits are taken into account. It dictates how you can use various tax credits and exemptions. The easiest way to find AGI is to simply look at your tax return if you have one prepared.

Your adjusted gross income is equal to your gross income, minus certain tax-deductible expenses, including:

• Certain business expenses for performing artists, reservists, and fee-basis government officials
• Educator expenses
• Half of any self-employment taxes
• Health insurance premiums (if you’re self-employed)
• Health savings account (HSA) contributions
• Moving expenses for members of the armed forces moving due to active duty
• Penalties on early withdrawal of savings
• Retirement plan contributions (including IRAs and self-employed retirement plan contributions)
• Student loan interest
• Tuition and fees

Step 2.  Add Back Certain Deductions

To find your MAGI, take your AGI and add back:

• Any deductions you took for IRA contributions and taxable Social Security payments
• Excluded foreign income
• Interest from EE savings bonds used to pay for higher education expenses
• Losses from a partnership
• Passive income or loss
• Rental losses
• The exclusion for adoption expenses

For most Mason Law, PC clients, MAGI will be the same as AGI.