The deductions taken on a return to determine a taxpayer's adjusted gross income don't apply to everyone. In fact, many people with relatively straightforward tax returns find that their modified adjusted gross incomes, or MAGI, and their adjusted gross incomes, or AGI, are the same. Calculating your MAGI is a matter of adding back a handful of deductions you took from your income to determine your AGI.
Calculate Your AGI
First, calculate your adjusted gross income on the first page of Form 1040. After you fill out the "Income" section on your 1040, you can take certain deductions in the "Adjusted Gross Income" section directly beneath it. These "above-the-line" deductions include things such as tuition and fees you paid during the tax year, individual retirement account contributions you made, alimony you paid, moving expenses and some expenses of self-employment.
Calculate Your MAGI
Calculating your MAGI involves adding back some of these AGI deductions. For example, your income might be $50,000 and you took two deductions in the Adjusted Gross Income section of your tax return: $12,000 for alimony you paid and $5,000 for your IRA contributions. This results in an AGI of $33,000 -- $50,000 minus $17,000 in above-the-line deductions. The Internal Revenue Service offers a calculator on its website that tells you which of these AGI deductions you must add back to figure out your MAGI. Alimony doesn't have to be added back, but IRA contributions do, so you would add back the $5,000 for your retirement contributions. Your MAGI would be $38,000 -- $5,000 more than your AGI because you had to add this particular deduction back. Your MAGI is what your adjusted gross income would have been if you hadn't taken certain deductions to calculate your AGI.
Why Your MAGI Matters
You can calculate your MAGI at tax time, but you might want to estimate it during the tax year so you can plan accordingly. Among other things, your MAGI determines whether you can deduct contributions made to your IRA. As of the 2014 tax year, the cutoff for this deduction is a MAGI of $69,000 for single taxpayers and $160,000 for married couples filing jointly. If yours is less than these limits, you can take the IRA deduction. It also affects whether you can take a deduction for tuition and education-related fees. Check with an accountant or tax attorney for the most up-to-date rules before you file your return.