Last year I was over the income limit and had to take money back. How do I determine my AGI or MAGI? I know my gross earnings for this year and my federal taxable gross (but I think this is lower than AGI, right?) Are there any calculators on the web that can help with this? I am hoping for a paritial contribution this year. IS there anything I can do to lower the MAGI now so I contribute? Thanks for your help and time. Any suggestions would be great along with web sites to check out!
Brett
Jason
{ 3 comments… read them below or add one }
Terri
Here is a good calculator provided by CNN Money for figuring out your AGI.
It is basically your earnings minus eligible deductions.
Once you have your AGI figured out, you can apply the modifications for estimating your MAGI for the year.
To arrive at your modified AGI, start with your adjusted gross income and then add back the following items:
1) Any income you excluded because of the foreign earned income exclusion.
2) Any exclusion or deduction you claimed for foreign housing.
3) Any interest income from series EE bonds that you were able to exclude because you paid qualified higher education expenses.
4) Any deduction you claim for student loan interest or qualified tuition and related expenses.
5) Any employer-paid adoption expense you excluded.
6) Any deduction you claimed for a regular contribution to a traditional IRA.
If you don’t have any of these deductions then your AGI will be the same as your MAGI. Since these deductions for MAGI add to your AGI the only way to decrease MAGI is to find more deductions to lower your AGI. Maybe take some capital losses to offset capital gains? A tax professional can help you more with this.
Also, here is an article that discusses income limits and other good information about the Roth IRA:
Hope this helps.
Joanne
If you think you’ll only be able to make a partial contribution, it’s probably better to wait until you finish your taxes (you can contribute for 2007 until 4/15/2008). I made the mistake of making a full contribution before the end of the year one time, and then I got an unexpectedly large Christmas bonus that put me over the income limit; so I had to take some back, which was a pain.
Grace
There is really no way to accurately calculate your AGI without completing the first page of form 1040. Fortunately for you, form 1040 for tax year 2007 has already been published. You should complete the first page and take the number on line 37 as your AGI. If you don’t know the exact number for a line, you will have to use an estimate. If the estimate is far enough off, your estimated AGI will also be inaccurate.
You really don’t have to contribute to your Roth IRA right now. You have until the tax deadline, April 15, 2008, to make your IRA contributions for tax year 2007. That’s helpful to people like you, who are in danger of running into an income limit and need exact numbers from their actual tax return. I suggest you wait to make your 2007 IRA contribution until you are ready to file your tax return next year. Then you will know exactly where you stand.
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