Modified Adjusted Gross Income (MAGI) - Glossary (2024)

FAQs

Modified Adjusted Gross Income (MAGI) - Glossary? ›

The figure used to determine eligibility for premium tax credits and other savings for Marketplace health insurance plans and for Medicaid and the Children's Health Insurance Program (CHIP).

Your MAGI (modified adjusted gross income) is your AGI plus certain deductions you must “add back.” These deductions include IRA contributions, student loan interest, one-half of self-employment tax, qualified tuition expenses, and more.

Your MAGI, modified adjusted gross income, is just your AGI with certain deductions added back, such as student loan interest, foreign-earned income and housing exclusions, and employer adoption benefits, among other things. The numbers may be close, and they may even be the same in some cases.

Modified Adjusted Gross Income (MAGI) Part B monthly premium amount. Prescription drug coverage monthly premium amount.

The Bottom Line. A 401(k) retirement plan will reduce both your AGI and MAGI, as contributions are taken out of your salary before taxes are deducted. This in effect reduces your salary in relation to taxes.

Your adjusted gross income (AGI) is your total (gross) income from all sources minus certain adjustments such as educator expenses, student loan interest, alimony payments and retirement contributions. If you use software to prepare your return, it will automatically calculate your AGI.

The number is your total taxable income for the year minus certain adjustments that you may qualify for. Adjustments are made for business expenses, student loan interest payments, and contributions to retirement accounts, for example. These are subtracted from gross income to arrive at adjusted gross income.

Pre-tax deductions — such as health insurance premiums, retirement plan contributions, or flexible spending accounts — are taken out of wages by the employer. Since this income isn't taxed, it doesn't count towards a household's MAGI.

Your MAGI is not included on your federal income tax return, but you can also find your AGI on line 11 of IRS form 1040.

Does Medicare check Magi every year? ›

Your MAGI is the total of your adjusted gross income and tax-exempt interest income. Each fall, when we ask the IRS for information to determine next year's premiums, we ask for tax information to verify your reports of changes affecting your income-related monthly adjustment amounts, if any.

Social Security income includes Social Security Disability Insurance (SSDI), retirement income, and survivor's benefits. These forms of income are counted in MAGI, even when not taxable.

MAGI is adjusted gross income (AGI) plus these, if any: untaxed foreign income, non-taxable Social Security benefits, and tax-exempt interest. For many people, MAGI is identical or very close to adjusted gross income. MAGI doesn't include Supplemental Security Income (SSI).

The calculation for IRMAA MAGI (Modified Adjusted Gross Income) includes just the taxable portion of Social Security. This comes from the Social Security Handbook here, which states: “Modified Adjusted Gross Income is the sum of: The beneficiary's adjusted gross income (AGI), plus.

Key Takeaways

AGI can reduce the amount of your taxable income by subtracting certain deductions from your gross income. MAGI is your AGI after factoring in tax deductions and tax-exempt interest. You can't find your MAGI on your tax return, although your AGI appears on line 11 of Form 1040.

This total is a line item on your annual tax return. Then add in the total of your non-taxable interest – This is usually any municipal bond income. The total of your AGI, plus non-taxable interest, is your MAGI for IRMAA purposes.

Your MAGI is not included on your federal income tax return, but you can also find your AGI on line 11 of IRS form 1040. If you still need extra help with the adjustments, you can work with a tax professional to ensure you've done the calculations correctly.

Medical expenses include dental expenses, and in this publication the term “medical expenses” is often used to refer to medical and dental expenses. You can deduct on Schedule A (Form 1040) only the part of your medical and dental expenses that is more than 7.5% of your adjusted gross income (AGI).