How to Calculate Your Modified AGI

I’d like to contribute to a Roth IRA, but I’m told that my eligibility for a Roth and the amount I can contribute depend on my modified adjusted gross income. What is the difference between that and my adjusted gross income? --R.R., Katy, Tex.

SEE ALSO -- STARTING OUT: Why You Need a Roth IRA

The definition of modified adjusted gross income varies depending on the tax break, but it generally means taking your adjusted gross income from the bottom of page 1 of Form 1040 and adding back certain deductions and exclusions. In the case of a Roth IRA, you have an extra step. To calculate your modified AGI, you would first subtract any amounts you converted or rolled over from a qualified retirement plan to a Roth IRA. Then you’d add back deductions for contributions you made to a traditional IRA plus any deductions for interest on student loans and for tuition and fees. You would also add back exclusions of qualified bond interest (shown on Form 8815) and of employer-provided adoption benefits. For the full list of deductions and exclusions, see IRS Publication 590, Individual Retirement Arrangements.

In 2013, you can contribute the maximum $5,500 to a Roth IRA only if your modified AGI is less than $178,000 if you’re married filing jointly (or $112,000 if you file as single or head of household). You can make a partial contribution if your joint income is less than $188,000, or less than $127,000 if you’re single.

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As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.