How to Calculate Modified Adjusted Gross Income for Net Investment Tax: A Guide
Modified Adjusted Gross Income (MAGI) for Net Investment Income Tax (NIIT) is a concept that refers to the computation of an individual’s or married couple’s taxable income. It plays a crucial role in determining liability for the 3.8% NIIT, which applies to certain types of investment income. MAGI is calculated by making adjustments to the Adjusted Gross Income (AGI) reported on an individual’s tax return, such as adding back deductions for certain retirement contributions and subtracting certain income exclusions.