Tax Report: Modified Adjusted Gross Income (MAGI) Section

The tax code notes multiple definitions of MAGI. This article explains how the MAGI Tiers section consolidates those definitions in a singular table to show eligibility for certain credits, deductions, and taxes

At its core, the concept of Modified Adjusted Gross Income (MAGI) seems straightforward: take Adjusted Gross Income (AGI) and modify it. The tricky part is that while the tax code makes multiple references to MAGI, there isn't one single definition. Instead, different tax concepts (credits, deductions, tax subjectivity, etc.) use multiple calculations to arrive at MAGI.

The MAGI Tiers section in the Tax Report lists several items to consider and highlights the "Planning Opportunity," the "Limits" of the MAGI range (based on filing status) for that opportunities, and whether your client is "Over/Under" the limits. The text color will change depending on whether the client is under the limit (green), over the limit (red), or within a phaseout range (yellow).

This taxpayer’s MAGI precludes them from a handful of these planning opportunities. Note that the Roth IRA contribution MAGI amount is different than the others in the box!

If you would prefer to hide specific opportunities based on your client’s situation, simply click the eyeball icon on the right-hand side and that opportunity will be grayed out as shown below. Items that you gray out in this section will not show up in presentation mode or on print outs.




For example, since this taxpayer doesn't have any children in college and isn't paying an education expenses, we might gray out the rows for the Lifetime Learning Credit, Student Loan Interest Deduction and American Opportunity Credit, unless we wanted those items on the report in anticipation of discussing how we might control income when their children are of college age.

You can view the equation for each MAGI definition by clicking on the teal question mark icon, or by viewing them at the bottom of the section. 



As with the planning opportunities in the MAGI Tiers section, you can choose to show all, some, or none of these calculations by clicking the eyeball icon to the right of the equation.

If you have a client who participates in Medicare, there is a separate MAGI calculation to determine if your client is subject to Income Related Adjustment Amount (IRMAA) surcharges on their Medicare Part B/D Premiums. You can read more about the MAGI calculation for that planning situation in our article on Tax Report: Medicare Part B/D Premiums.