Modified Adjusted Gross Income (MAGI) Limit for tax credit qualification

If MAGI is above the limit, do you qualify for tax credit?

Possibly. It depends on your income. Partial credits of less than $7,500 are available for some taxpayers whose MAGI exceeds the phaseout limits. The credit becomes totally unavailble for individual taxpeyers with modifiyed adjusted gross income of more than $95,000 and for married taxpayers filling joint returns with an AGI of more than $170,000

Tomorrow, I will cover how partial credit is calculated...

Modified Adjusted Gross Income?

Modified Adjusted Gross Income or MAGI is defined by the IRS. To find it, a taxpayer must first determine his/her "adjusted gross income" or AGI. AGI is total come for a year minus certain deductions (known as "Adjustments" or "above th eline deductions"), but before itemized deductions from Schedule A or personal exemptions are substracted. On Forms 1040 or 1040-A, AGI is the l ast number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007). Note that AGI includes all forms of incomes icluding wages, salaries, interest income, dividents and capital gains.

To determine modified adgusted gross income (MAGI), add to AGI certain amounts such as foreighn income, foreign-housing deductions, student loan deductions, IRA-contribution deductions and deductions for higher-education costs.

Tomorrow, I will cover limits of MAGI for the purpose of first home buyers' tax credit...