What is Modified Adjusted Gross Income (MAGI) and why is it important to healthcare?
Your Modified Adjusted Gross Income (MAGI) is the income used by the government to determine if you qualify for any tax subsidies. A tax subsidy is the amount of money paid by the government to your private insurance company to lower your costs and keep your plan affordable for you. The amount of your subsidy, if any, is based on family size and household income. You cannot use a tax subsidy if you have access to affordable job-based coverage.
Generally, MAGI is the total of your household's Adjusted Gross Income and any tax-except interest income you may have (amounts on lines 37 and 8b from IRS Form 1040).
For most all of us, MAGI is the same number as your Adjusted Gross Income (AGI).
We recommned that you consult with a CPA or tax advisor if you have additional questions about calculating your MAGI or other tax advice.
How to calculate your Gross Income (GI):
Your gross income is the total money you earn through wages, interests, dividends, rental income, royalty income, capital gains, business income, farm income, unemployment, and alimony. It includes your salary, interest, income from investments, and any income you made through business, trade, or investments.
How to calculate your Adjusted Gross Income (AGI):
This is your GI minus your IRS deductions: things like IRA contributions, moving expenses, alimony paid, self-employment taxes, and student loan interest.
GI - Deductions = AGI