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Calculating the MAGI to be eligible for Roth contributions is one of the most common misunderstandings we see when tax planning with our clients.
One confusing part of our tax code is that the term MAGI, or modified adjusted gross income, has many different calculations and definitions. This video covers how to calculate your MAGI that determines if you are eligible to make Roth IRA contributions.
There are many tax deductions, credits, benefits and surcharges that may be available to you depending on your MAGI.
These may be valuable tax credits for families with college age children, like the American Opportunity Credit.
They might be added taxes, like the Net Investment Income Tax, or the Medicare IRMAA surcharge.
And another is the ability to contribute to a Roth IRA.
All of these benefits or surcharges have different calculations of MAGI. For example, in 2025 the Net Investment Income Tax kicks in for those with a MAGI above $250,000, seemingly right at about the same level of MAGI that Roth IRA contributions are not allowed, which is $248,000.
However, because of the differences in the calculation of MAGI for each of these, it is entirely possible to be subject to the Net Investment Income Tax, but still be able to make Roth IRA contributions.
The MAGI calculations for Roth contribution eligibility backs out one key source of income – The income from Roth conversions. Many of those near retirement that are doing Roth conversions immediately assume they are no longer eligible for Roth IRA contributions. But even if you are doing Roth conversions of many hundreds of thousands of dollars, you may still be able to get additional contributions into your Roth IRA.
The exact formula for the MAGI for Roth conversions is:
AGI + IRA Deduction + Student Loan Interest Deduction + Total Foreign Income Exclusions + Foreign Housing Deduction – Taxable Roth Conversion
If you are in position where you are doing Roth conversions, be sure to double check if you are still eligible for Roth contributions to get some extra money into these great tax free accounts.
If your income is too high to do regular Roth contributions, you have a few other options to consider. Click the links below for details:
Can you do backdoor Roth IRA contributions?
Or, you could decide between making a non-deductible IRA contribution vs saving to a brokerage account
Matt worked for the Department of Defense as a material scientist before changing careers to follow his interests in personal finance and investing. Matt has been quoted in The Wall Street Journal, CNBC, Kiplinger, and other nationally recognized finance publications as a flat fee advisor for Arnold and Mote Wealth Management. He lives in North Liberty, where you will likely find him, his wife Jessica, and two kids walking their dog on a nice day. In his free time Matt is an avid reader, and is probably planning his next family vacation.