Definition

MAGI takes your AGI and adds back specific items, such as certain foreign income exclusions. It is the figure that determines whether you can contribute to a Roth IRA, deduct a Traditional IRA, or face certain surtaxes. Because it can include add-backs that AGI excludes, MAGI is often slightly higher than AGI.

1. Adjusted Gross Income (AGI)

   Your total income minus specific adjustments, used as a key tax reference figure.
2. Roth IRA

   An individual retirement account funded with after-tax money that grows and is withdrawn tax-free.
3. Backdoor Roth

   A legal way for high earners to fund a Roth IRA despite income limits.