Most Read from The Wall Street JournalFor example, why can’t a young worker fully deduct a contribution to her traditional IRA when she seems to qualify for it? Why does a retiree owe tax on Social Security payments when his reported income is below the tax thresholds? Although the term doesn’t appear on the 1040 form, MAGI affects at least a dozen tax breaks used by millions of filers. Kiersten EssenpreisStarting pointTo understand MAGI, start with adjusted gross income (AGI) on Line 11 of the 1040 form. Take the young worker who wants a full tax deduction for her traditional IRA contribution of $6,500 for 2023.

Source: Wall Street Journal March 02, 2024 22:17 UTC