ACap ReCap: Financial and Tax Tips
ACap Advisors & Accountants is a boutique fee-only Wealth Management and full-service Accounting firm based in Los Angeles. We handle everything from taxes to investments to risk management and estate planning, providing comprehensive, unbiased financial advice in one location. In our ACap ReCap episodes, we discuss the latest financial news, answer the frequently received financial questions, and share financial tips with you. If you have questions or suggestions email us hello@acapam.com Find more details at https://www.acapam.com/ #financialadvisor #fiduciaryfinancialadvisor #finance #financial #money #wealthmanagement #assetmanagement #investment #tax #taxplanning
ACap ReCap: Financial and Tax Tips
Roth IRA Income Limits Explained: AGI vs. Modified AGI and Why It Matters
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Why can’t I contribute to a Roth IRA if I make too much?
The answer almost always comes down to one thing — Modified Adjusted Gross Income (MAGI).
In this episode, we break down the difference between Adjusted Gross Income (AGI) and Modified Adjusted Gross Income (MAGI) — two terms that sound similar but have very different impacts on your financial life.
You’ll learn:
- How AGI is calculated directly from your tax return
- What income counts (W-2 wages, capital gains, rental income, RSUs, Social Security, business income, and more)
- Which deductions reduce your AGI (HSA contributions, SEP/SIMPLE IRA, self-employed health insurance, student loan interest, etc.)
- Why itemized deductions and the standard deduction do NOT affect AGI
- How MAGI is calculated by adding certain items back to AGI
- Why MAGI determines eligibility for Roth IRA contributions, premium tax credits, education credits, child tax credits, and income-based student loan repayment
We also explain why lenders care about AGI — and why taxpayers often misunderstand what actually lowers it.
If you’ve ever been told your income is “too high” for a Roth IRA contribution, this episode will make it clear why — and what that really means for your tax planning strategy.
This is core tax planning knowledge. And if you earn a strong income, it’s not optional.
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