Understanding MAGI Vs. AGI

[Mr. Metal Mustache]

I have a question regarding MAGI and AGI. When calculating MAGI is it correct that you add back in Traditional IRA contributions? Meaning that those won't help you meet any limits connected to MAGI? Are HSA contributions an exemption to that rule? The point being is that I am within 2,000.00 of hitting a certain threshold for healthcare and wanting to double check.

My understanding is that you use line 11on your 1040 and then add any IRA contributions. If you had any tax exempt interest for State tax, I am assuming that would not matter since this is regarding a federal return.

Thanks all

[geekette]

Direct from the horse's mouth, er, the IRS website.  There are several flavors, depending on what you're calculating it for.

[Mr. Metal Mustache]

Thanks for the link... Can't believe I missed that. Trying to calculate for Medicaid

[secondcor521]

Thanks for the link... Can't believe I missed that. Trying to calculate for Medicaid

Medicaid is administered by the states.  Check with your state Medicaid folks (Department of Health and Welfare in my state) for their definition.

[seattlecyclone]

AGI is an unambiguous number: it's what shows up on Line 11 of your 1040.

MAGI is just the AGI, Modified in a particular way for a given tax benefit. The exact set of modifications depends on what tax benefit you're looking at.

To calculate the MAGI for determining whether you can deduct your IRA contributions, you do need to add your IRA deduction back in. To calculate the MAGI for ACA health care (including expanded Medicaid) you don't need to add your IRA deduction or HSA deduction back in. These deductions reduce your ACA MAGI.

Also be aware that Medicaid eligibility is usually calculated on a month-by-month basis. If you have a very low income most months and a higher income only in occasional months, it's possible to be Medicaid-eligible for most or all of the year even if your total annual income is over 138% of the poverty level.

[Mr. Metal Mustache]

@seattlecyclone That was extremely helpful - Thank you!

[MDM]

Modified Adjusted Gross Income - Bogleheads has links to ten different MAGI calculations.

[lifeisshort123]

AGI is an unambiguous number: it's what shows up on Line 11 of your 1040.

MAGI is just the AGI, Modified in a particular way for a given tax benefit. The exact set of modifications depends on what tax benefit you're looking at.

To calculate the MAGI for determining whether you can deduct your IRA contributions, you do need to add your IRA deduction back in. To calculate the MAGI for ACA health care (including expanded Medicaid) you don't need to add your IRA deduction or HSA deduction back in. These deductions reduce your ACA MAGI.

Also be aware that Medicaid eligibility is usually calculated on a month-by-month basis. If you have a very low income most months and a higher income only in occasional months, it's possible to be Medicaid-eligible for most or all of the year even if your total annual income is over 138% of the poverty level.

This is SO helpful, and explains to me why I have always found MAGI so confusing... I wish the government would stop MAGI entirely and just use AGI, but I understand why they may wish to create MAGIs for the purpose of determining eligibilities.