AGI effects on your taxes
The amount of your AGI affects how you can use numerous credits and exemptions. Your AGI affects the amount you can claim for the dependent care credit, credits for the elderly or permanently disabled, the adoption credit, the child tax credit, the Hope & Lifetime Learning credits, and the earned income credit. Many deductions phase out or disappear altogether if you have an AGI above certain limits. Deductions affected by your AGI include the following:
• Total itemized deductions
• Miscellaneous itemized deductions
• Mortgage insurance premiums
• Qualified motor vehicle taxes
• Charitable contributions
• Medical deduction allowance
MAGI calculation
To calculate your modified adjusted gross income, take your AGI and add back certain deductions. Many of these deductions are rare, so it's possible your AGI and MAGI can be identical. According to the IRS, your MAGI is your AGI with the addition of the following deductions, if applicable:
• Student loan interest
• One-half of self-employment tax
• Qualified tuition expenses
• Tuition and fees deduction
• Passive loss or passive income
• IRA contributions, taxable social security payments
• The exclusion for income from U.S. savings bonds
• The exclusion under 137 for adoption expenses
• Rental losses
• Any overall loss from a publicly traded partnership