To calculate your MAGI, take your AGI and add back some of these deductions, including:
- Student loan interest
- Tuition and fees
- IRA contributions
- Half of your self-employment taxes
- Rental losses
- Passive losses or passive income
- Employer-paid adoption expenses
- Foreign earned income
- Losses from publicly traded partnerships
- Taxable Social Security payments (excluding SSI)
It's possible your MAGI could end up being the same as your AGI, although this isn't always true. Once you have this number, you can calculate your reduced Roth IRA contribution limit for the year using the following formula:
- Find your MAGI using the steps above.
- Choose the appropriate next step based on your tax filing status:
- Single, head of household, or married filing separately if you didn't live with your spouse all year: Subtract $146,000 from your MAGI for 2024 or $150,000 for 2025.
- Married filing jointly or qualifying widow(er): Subtract $230,000 for 2024 or $236,000 for 2025.
- Married filing separately if you lived with your spouse at any point during the year: Proceed with your MAGI to the next step.
- Divide your result from step 2 by:
- $15,000 if you filed single, head of household, or married filing separately if you didn't live with your spouse all year
- $10,000 if you filed married filing jointly, qualifying widow(er), or married filing separately if you lived with your spouse at any point during the year
- Multiply your result from step 3 by the applicable annual contribution limit: $7,000, or $8,000 if you're 50 or older.
- Subtract your result from step 4 from the annual contribution limit.
To see how this works in practice, consider a single adult younger than 50 who has a MAGI of $150,000 in 2024. They would subtract $146,000 from their MAGI, getting $4,000. Then they would divide that $4,000 by $15,000, leaving 0.267. They would then multiply the 0.267 by the $7,000 annual Roth IRA contribution limit for adults younger than 50 and get $1,867. Finally, they'd subtract that $1,867 from the $7,000 limit for a maximum reduced contribution limit of $5,133.
It sounds pretty complex, but it's not too difficult to figure out once you've got your MAGI. Keep in mind that the government changes the rules from year to year about who can contribute to a Roth IRA and how much they can contribute. Therefore, you should always check to see if anything's changed before making contributions in future years.
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