How can I reduce my MAGI?

ruebarb2000

How can I reduce my MAGI? I want to qualify for certain subsidies on the Connect for Colorado Health Care exchange. Can I contribute to a standard IRA? or does that have to be added back on the AGI like a Roth IRA? Can I contribute to any HSA or only if I have a qualifying health care plan (high deductible?)

CorinaE

Your adjusted gross income (AGI) is your total (gross) income from all sources minus certain adjustments. Your modified adjusted gross income (MAGI) is your adjusted gross income with certain deductions added back.

To figure your adjusted gross income, you take your gross income and subtract certain adjustments such as:

• Alimony payments
• Educator expenses
• Certain business expenses – reservists, performing artists, fee-based government officials
• Deductible HSA contributions
• Deductible IRA contributions
• Moving expenses – military only
• Deductible self-employment taxes
• Penalties on early savings withdrawal
• Retirement contributions
• Student loan interest

(All adjustments to income)

You calculate your MAGI based on the tax deduction or credit you’re taking.

The general MAGI calculation adds back:

• IRA contributions
• Student loan interest – Form 1040, Schedule 1, line 21
• Foreign earned income and housing exclusions - Form 2555, line 45
• Foreign housing deduction or income exclusion - Form 2555, line 50
• Savings bond interest excluded from your income - Form 8815, line 14
• Adoption benefits excluded from your income - Form 8839, line 28