What does Modified Adjusted Gross Income (MAGI) include?

Modified Adjusted Gross Income (MAGI) is a critical figure used in various aspects of tax calculations, particularly in determining eligibility for certain tax benefits and credits. It is primarily derived from Adjusted Gross Income (AGI) but includes specific adjustments that augment the baseline income figure.

MAGI accounts for AGI, which is your total income minus specific deductions such as retirement plan contributions and student loan interest. However, to arrive at MAGI, some additional income types must be added back to the AGI. These may include certain deductions that are typically excluded, medical savings account deductions, and other specific items defined by the IRS.

This inclusion of both AGI and certain deductions highlights why the correct answer identifies MAGI as AGI plus specific deductions, illustrating how MAGI reflects a more comprehensive picture of an individual's income status than AGI alone. Understanding MAGI is essential for individuals, especially those seeking to qualify for tax benefits that depend on their income level.