Hey mustachians --
I'm trying to figure out whether DW and I can contribute to a tax-deductible TIRA this year. I need to know our AGI. I've got some fancy calculators that get me accurately from our gross income to our taxable income, but I forgot that AGI is not the same as taxable income. I need help figuring out exactly how to calculate AGI.
Here's how I'm wrapping my brain around it:
Gross income > MAGI > AGI > taxable income
Gross - X = MAGI
MAGI - Y = AGI
AGI - Z = taxable income
Where X, Y, and Z are SOME STUFF.
Question: Do each of these things fall into category X, Y, or Z? I know they all reduce my taxable income, but I don't know in which category. So hard to find a clear answer online.
- Pre-tax salary deduction for employee's share of pension
- Pre-tax salary deduction for retiree healthcare costs
- Pre-tax salary deduction for medical, dental, disability insurance
- Pre-tax salary deduction for transit expenses
- Pre-tax healthcare flexible spending account contribution
- Pre-tax contributions to 457(b), 403(b), or 401(k)
- State and local income tax deduction
The following things I'm pretty sure are in category Y:
- Student loan interest deduction
The following things I'm pretty sure are in category Z:
- Itemized deductions
- Personal exemptions
And finally, what about the TIRA contribution itself? Does the IRS check whether you're eligible to deduct the TIRA before or after deducting the contribution? Meta.
Just for reference, we're married filing jointly and both covered by retirement plans at work, which means our TIRA deductiblity begins to phase out at $96k AGI and is totally phased out at $116k. Our gross income is around $152k in 2014, but taxable income will be $78-83k depending on whether we can deduct a TIRA contribution. That's why pegging the AGI marker is important.
TIRA deductibility guidelines at IRS:
http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/2014--IRA-Contribution-and-Deduction-Limits---Effect-of-Modified-AGI-on-Deductible-Contributions-If-You-ARE-Covered-by-a-Retirement-Plan-at-Work