Tax season is approaching, and for many people, it may be a stressful time. One of the reasons why many put off doing their taxes is that they appear to be difficult. One of the main sources of concern is a misunderstanding of terminology.
In your daily life, how often do you mention vested benefits or accelerated depreciation? However, one way that families can empower themselves and start winning big with their money is to ensure that their finances, including taxes, are handled appropriately.
Your income is one of the key topics. Your modified adjusted gross income (MAGI) is one of those key terms. Let’s take a look at how knowing your MAGI may help you with your taxes.
So What Is Your Modified Adjusted Gross Income?
Your MAGI is calculated using your adjusted gross income, as you would have guessed from the name. A person’s adjusted gross income is their entire gross income minus certain deductions. IRA contributions, alimony payments, HSA contributions, and student loan interest are all examples of these deductions.
Your health insurance premiums and retirement plan contributions may also be utilized if you’re self-employed. To take it a step further, your adjusted gross income is calculated using your gross income.
Why It Matters
Your modified adjusted gross income is significant because the IRS analyzes it to determine whether you are eligible for particular tax advantages. One of the most important is your Individual Retirement Account (IRA). It can tell you if you can contribute to a Roth IRA and if you can deduct any conventional IRA contributions.
Still Having High Tax Bills?
No taxpayer in their right mind wants to be hit with that tax bill, especially if it tends to be a struggle to pay off. The tax credit will not be enough to satisfy any tax debts individuals and families may have with the IRS.
But there is a new and improved relief program that consolidates many major relief programs into a one-size-fits-all assistance program. Any issues regarding back taxes, unfiled years, or any other tax-related problems may be solved through one program; the IRS Fresh Start Program!
How Simple Is Qualifying?
Considering that the Fresh Start Program is a federal program, you would think meeting the qualifications may be very difficult, but really, it’s a lot simpler and quicker than you think. Take the following steps in order to find out if you are eligible in as little as 3 minutes.
- Fill out some basic information about yourself and your back taxes here.
- Have a representative reach out to you to discuss your eligibility.
- Go through the enrollment process and finally reduce or eliminate your tax liabilities.