Modified Adjusted Gross Income

Modified adjusted gross income is an employee's adjusted gross income for a tax year, plus any tax exempt interest they have earned.The taxpayer's adjusted gross income, and is then modified for each individual purpose.

MAGI, for purposes of the U.S. Savings Bonds exclusion, is usually computed in the same manner as the regular AGI. However, the amount of interest included in MAGI is the amount before any qualified bond exclusion has been subtracted. Any student loan interest deduction shown Form 1040, must be added back, and any employer-provided adoption benefits which were excluded from income must be added in. Also, certain taxpayers must add back the foreign earned income exclusion, the foreign housing exclusion or deduction, the exclusion for income from certain U.S. possessions, and the exclusion for income from sources within Puerto Rico.