The Internal Revenue Service (IRS) restricts your ability to contribute to a Roth IRA each year based on your modified adjusted gross income (MAGI), not your adjusted gross income (AGI). If you are married and want to make a contribution to your Roth IRA, you need to make sure your modified adjusted gross income falls below the annual limits. The IRS publishes these limits in Publication 590. If you do not realized your modified adjusted gross income exceeds the limits and you make a contribution to your Roth IRA, the IRS charges excess contribution penalties.
1. Look up your adjusted gross income on line 38 of your Form 1040 tax return or line 22 of your Form 1040A tax return.
2. Subtract the amount of income resulting from converting a retirement plan to a Roth IRA during the year. For example, if your adjusted gross income equals $180,000 but you converted $10,000 from your traditional 401k plan to a Roth IRA, subtract $10,000 from $180,000 to get $170,000.
3. Add the value of any deduction taken for traditional IRA contributions. For example, if you claimed a $1,000 deduction for a traditional IRA contribution, add $1,000 to $170,000 to get $171,000.
4. Add the value of any student loan interest or tuition and fees deductions you claimed during the year. For this example, if you claimed a $500 student loan interest deduction, add $500 to $171,000 to get $171,500.
5. Add the value of any domestic production activities deduction, any foreign earned income exclusion and/or housing exclusion, any foreign housing deduction, any excludable qualified savings bond interest and any excluded employer-provided adoption benefits to calculate your modified adjusted gross income for the purposes of contributing to a Roth IRA. In this example, if you claimed a $200 exclusion for qualified savings bond interest, add $171,500 to $200 to get $171,700.
6. Compare your modified adjusted gross income to the income limits for married couples filing a joint return. As of the time of publication, you can make a full contribution is your modified adjusted gross income falls below $167,000 and a reduced contribution if your modified adjusted gross income falls between $167,000 and $177,000.
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