Terms of Use 

Adjusted Gross Income (AGI)

Your adjusted gross income (AGI) is the number at the bottom of page 1 on your income tax return, IRS Form 1040 or 1040A.  On Form 1040EZ, adjusted gross income appears on line 4.

Specifically, it's your gross income minus so-called above-the-line deductions. These include: 

  • deductible IRA contributions (as well as deductible SEP, SIMPLE and Keogh contributions)
  • student-loan-interest deduction
  • deductible contributions to medical savings accounts and health savings accounts
  • moving-expense deduction
  • half of the self-employment tax paid by self-employed individuals
  • deduction for health-insurance premiums paid by self-employed persons
  • deduction for higher education expenses
  • penalties on the early withdrawal of savings and deductible alimony payments
  • $250 deduction for teachers
  • legal fees for certain litigation settlements and awards.

AGI does not include the standard deduction or itemized deductions.

Modified Adjusted Gross Income (MAGI)

The key figure for purposes of calculating eligibility for deductible IRA and Roth contributions is "modified" adjusted gross income. 

 In general, MAGI is simply equal to your AGI before taking into account deductible IRA contributions.  MAGI could also be affected by adding back the following:

  • the student-loan-interest deduction
  • the deduction for higher education costs
  • U.S. Savings Bond interest excluded from taxation because it's used to pay higher-education expenses
  • certain employer adoption-assistance payments excluded from taxation
  • certain foreign earned-income and foreign-housing-cost reimbursements excluded from taxation
  • the deduction for domestic production activities
Things you don't have to add to the AGI:
  • Contributions to employer-sponsored plans, like 401(k)s
  • Taxable income generated by converting to a Roth IRA