Is the standard deduction included in MAGI calculation

[WhiskyDave]

Quick question

I know MAGI is loosely based on the AGI but is the standardized deduction (12K SF & 24k per couple MFJ) carried over and factored in to the MAGI income calculation?

If not, can rental deductions be included? (not losses, as I know they cannot) just deductions?

Thanks!

 

[COcheesehead]

No

 

[SevenUp]

The answer is "no" for any MAGI, but see MAGI - Bogleheads to find the calculation for the specific MAGI of interest.

 

[cathy63]

Deductions come after the MAGI calculation.

You put your rental income and deductions on Schedule E, and that is included in your MAGI, whether it's a gain or loss.

 

[Golden sunsets]

A quick and dirty definition of MAGI, at least for IRMAA purposes, is AGI plus tax exempt interest.

 

[pb4uski]

Or here is a better definition: http://laborcenter.berkeley.edu/pdf/2019/magi.pdf

MAGI does include deductions for deductible IRA contributions and HSA contributions. The former can be handy in managing MAGI if you have earned income and the latter if you have a HSA-eligible health insurance policy.

 

[SevenUp]

A quick and dirty definition of MAGI, at least for IRMAA purposes, is AGI plus tax exempt interest.

Or here is a better definition: http://laborcenter.berkeley.edu/pdf/2019/magi.pdf

MAGI does include deductions for deductible IRA contributions and HSA contributions. The former can be handy in managing MAGI if you have earned income and the latter if you have a HSA-eligible health insurance policy.

Good example of the problem with saying only "MAGI": those are two different (out of at least ten different) uses and definitions of "MAGI". For all we know, OP might have have meant MAGI for traditional IRA purposes or another.

 

[pb4uski]

I thought it was pretty evident that the OP was asking about Obamacare MAGI because he had indicated that ACA was part of his retirement plan in another thread... but you make a good point about numerous different MAGI.

 

[gauss]

Deductions come after the MAGI calculation.

You put your rental income and deductions on Schedule E, and that is included in your MAGI, whether it's a gain or loss.

In general,wouldn't the passive loss limitations come into play here?


-gauss

 

[cathy63]

In general,wouldn't the passive loss limitations come into play here?


-gauss

Yes, but that's calculated on form 8582 and entered on Sched E. So whatever number comes out on the bottom of Sched E already includes passive loss limitations. That number is carried to Sched 1 and from there to the 1040 line 7a.

AGI is on the 1040 line 8b.

 

[NateW]

To get MAGI you first need to first calculate (or estimate) your adjusted gross income (AGI). That is line 8b of Form 1040. Looking at Form 1040, AGI is the sum of:

Line 1 (Wages, salaries, tips, etc.),
Line 2b (taxable interest),
Line 3b (ordinary dividends),
Line 4b (taxable amount of IRA distributions),
Line 4d (taxable amount of pensions and annuities),
Line 5b (taxable amount of social security benefits),
Line 6 Capital gain or (loss),
Line 7a Other income from Schedule 1, line 9

From the total of the above items, deduct adjustments to income (if any) from Schedule 1, line 22. This gives AGI.

To get MAGI you also need to add to AGI the non-taxable part of any SS payments and non-taxable interest you received.

I trust others will add anything I missed or note any corrections.

See: https://www.healthcare.gov/glossary/modified-adjusted-gross-income-magi/

My question is can a $3000 capital loss carryover be deducted from income to get MAGI and I have not seen the answer anywhere, but I assume you can because this deduction is allowed/included in the calculation of AGI, per Form 1040, line 6.

 

[SevenUp]

To get MAGI you first need to first calculate (or estimate) your adjusted gross income (AGI).
...
My question is can a $3000 capital loss carryover be deducted from income to get MAGI and I have not seen the answer anywhere, but I assume you can because this deduction is allowed/included in the calculation of AGI, per Form 1040, line 6.

The answer to your question is in your first sentence: AGI is the starting point for Modified AGI (MAGI). Do what tax law allows for AGI, then modify that according to which of the ten MAGIs is of interest.

 

[gauss]

Yes, but that's calculated on form 8582 and entered on Sched E. So whatever number comes out on the bottom of Sched E already includes passive loss limitations. That number is carried to Sched 1 and from there to the 1040 line 7a.

AGI is on the 1040 line 8b.

Thank you for the clarification.


-gauss