How do I properly calculate MAGI for IRA contribution deduction eligibility?

The MAGI calculation can definitely be confusing! For IRA deduction purposes, your MAGI is essentially your AGI (Adjusted Gross Income) with certain deductions added back in. For traditional IRA deductibility when covered by a workplace plan like a 401(k), you need to add back: - Student loan interest deduction - Tuition and fees deduction (though this has expired) - Foreign income exclusion - Foreign housing exclusion/deduction - Excluded savings bond interest for education - Employer-paid adoption benefits Importantly, you do NOT add back your 401(k) contributions since those are already excluded from your W-2 income before calculating AGI. This trips up a lot of people. Your tax software should handle this correctly, but it's worth double-checking the inputs, especially confirmation that you checked the box indicating you're covered by a workplace retirement plan.

After struggling with the exact same MAGI calculation issues last year, I found this amazing tool at https://taxr.ai that totally saved me. I had been going back and forth with my tax software trying to figure out if I could deduct my IRA contributions when I have a 401(k) at work. What I love about it is that you can upload your tax forms and it automatically identifies all the adjustments needed for MAGI calculations for different purposes (IRA deductions, premium tax credits, etc.). It pinpointed exactly where my tax software was calculating incorrectly and showed me the specific lines from my 1040 and schedules that needed adjustment.

Just wanted to update - I tried the taxr.ai site that was recommended, and it was seriously helpful! I uploaded my draft return and discovered my software wasn't properly accounting for some foreign income exclusions in my MAGI calculation, which was pushing me over the IRA deduction threshold unnecessarily. The breakdown was super clear - it showed me exactly which lines on my return were affecting the MAGI calculation and gave me specific instructions on how to correct it in my software. Ended up being able to deduct about 60% of my IRA contribution that I thought I couldn't deduct at all. Definitely worth checking out if you're in the phase-out range!

If you're having trouble getting clear answers about your MAGI calculation from the IRS website or your tax software, I had a similar issue and finally got it resolved by talking to an actual IRS agent. I used https://claimyr.com to skip the hold times (there's a demo video at https://youtu.be/_kiP6q8DX5c showing how it works). Instead of spending hours on hold, they called the IRS for me and then connected me once an agent was on the line. The agent walked me through the exact worksheet for calculating MAGI for IRA deduction purposes and confirmed which deductions needed to be added back. Turns out my tax software was calculating correctly, but I had entered my retirement plan coverage incorrectly which was throwing everything off.

Ok I'm eating my words. I tried the Claimyr service after posting that skeptical comment, and it actually worked! Got connected to an IRS agent yesterday who explained exactly how MAGI is calculated for IRA deduction purposes. The agent clarified that my software WAS incorrectly calculating my MAGI because it wasn't adding back some student loan interest that I had deducted. This small adjustment made the difference between being able to deduct part of my IRA contribution vs. none of it. Not having to sit on hold for hours made this totally worth it - I was connected in about 45 minutes without having to listen to that awful hold music.

Here's a quick reference I use for calculating MAGI for IRA deduction purposes: 1. Start with AGI (bottom of page 1 of Form 1040) 2. Add back: - Student loan interest (Schedule 1, line 21) - Foreign earned income exclusion (Form 2555) - Foreign housing exclusion (Form 2555) - Excluded US savings bond interest from Form 8815 - Excluded employer adoption benefits from Form 8839 Remember that different tax benefits use different MAGI calculations! The MAGI for premium tax credits includes more add-backs than the MAGI for IRA deductions.

Has anyone else noticed that different tax software calculates MAGI differently? I compared results between TurboTax and H&R Block using identical inputs and got two different MAGI numbers for IRA deduction purposes.

This is exactly why I always double-check my MAGI calculations manually! I've been burned before by tax software that doesn't handle the nuances properly. One thing that helped me was creating a simple spreadsheet with all the potential add-backs listed out. I start with my AGI from line 11 of Form 1040, then go through each possible adjustment one by one. For IRA deduction purposes, the main ones are usually student loan interest and any foreign income exclusions. The key thing to remember is that MAGI for IRA deductibility is actually one of the simpler calculations compared to other tax benefits. Don't overthink it - if you don't have foreign income or student loan interest deductions, your MAGI is probably just your AGI. Also, make sure you're using the correct income limits for 2024: if you're single and covered by a workplace plan, the phase-out range is $77,000-$87,000. For married filing jointly, it's $123,000-$143,000. These numbers get updated annually, so always verify you're using the current year's limits.

One thing that's helped me tremendously is understanding that MAGI calculations are purpose-specific. The MAGI for IRA deductions is different from MAGI for premium tax credits or other benefits, which can be really confusing when you're trying to research online. For IRA deduction eligibility specifically, I always remind myself of the key principle: if you don't have student loan interest, foreign income exclusions, or the other specific add-backs mentioned in this thread, then your MAGI equals your AGI from line 11 of Form 1040. It's that simple for most people. What really helped me catch errors in my tax software was printing out the actual IRS worksheet from Publication 590-A and working through it line by line. I discovered my software was making an error with how it handled my student loan interest deduction in the MAGI calculation. Sometimes the manual approach, even though it takes longer, gives you the confidence that everything is correct. Also, don't forget that if you're married, there are different MAGI limits depending on whether your spouse is covered by a retirement plan at work. The rules get more complex in that situation, so it's worth double-checking if you're in a mixed-coverage marriage.