Modified Adjusted Gross Income

Many tax deductions, adjustments and credits are phased out or disallowed once a taxpayer’s adjusted gross income (AGI) reaches a certain level that varies depending on the particular tax benefit. However, the AGI for these purposes is usually not the regular AGI, but is instead AGI without certain other benefits being allowed and is called modified AGI. For example, when testing to see if the income phase-out threshold has been reached for claiming an education credit, the AGI must be figured without claiming the exclusions that are available for certain foreign earned income.