Question

Ways to reduce MAGI

Forum|Forum|1 year ago
October 30, 2024
1 reply
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I bought an electric Vehicle this year and it appears I have a MAGI over $150,000 which is the cut off to get the $7500 tax rebate. Is there any way for me to reduce my MAGI before the end of the year to qualify?

ClarissaA1

Adjusted gross income (AGI) and Modified adjusted gross income (MAGI) are closely related, and for many taxpayers these figures are identical. The MAGI amount is your AGI after adding back in some common deductions that apply a large number of taxpayers. You can find an in-depth discussion of AGI versus MAGI here: What is the difference between AGI and MAGI on your taxes

Based on your question, I'm making the assumption you have done the math and added back any deductions that apply to you to increase your AGI to the MAGI figure that is used to determine your eligibility for the electric vehicle tax credit.

Reducing your AGI/MAGI could be tough with so little time left in the year, but if you haven't maxed out an employer-sponsored retirement plan, that could give you some flexibility to lower your MAGI. The add-back provisions to AGI require you add back in IRA deductions - but contributions made to employer sponsored plans (like a 401k or 403b) are not added back as part of MAGI. Another possible fix (if you are covered by a high deductible health plan) would be making a contribution to a Health Savings Account. HSA contributions also reduce AGI/MAGI.

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