A fraction is determined as follows: (a) the numerator is the excess of the taxpayer's modified adjusted gross income
for 2010 over $70,100 (single or head of household) or $105,100 (married filing jointly; (b) the denominator is $15,000 (single or head of household), or $30,000 (joint return).
The credit is reduced by 2% of the taxpayer's modified adjusted gross income
in excess of $75,000 ($150,000 for a joint return).
Even though the Wilsons' modified adjusted gross income
is $17,360, they do not qualify for the earned income credit because their total earned income is not less than $32,121.
It's true that income limits may crimp Roth IRA contributions--single taxpayers can't contribute for 2017 with modified adjusted gross income
of at least $133,000, or $196,000 on joint tax returns.
The net investment income tax is a 3.8% tax on net investment income for taxpayers with modified adjusted gross income
over a MAGI threshold.
The "non-income" categorization of the distributions also means there is no effect on how much clients receive in Social Security benefits, pay in capital gains or Medicare premiums, all of which are impacted by Adjusted Gross Income or Modified Adjusted Gross Income
, and commonly impacted by other classes of retirement assets.Putting the advantages to work
This tax applies to individuals with modified adjusted gross income
in excess of $200,000 for single return filers and $250,000 for joint filers.
The rate is 3.8% of the lower of net investment income or the amount of modified adjusted gross income
(MAGI) over specific thresholds.
For an individual, the tax is 3.8 percent of the smaller of net investment income or the excess of modified adjusted gross income
(adjusted gross income increased by certain foreign earned income) over $250,000 for a married couple or surviving spouse, $125,000 for a married individual filing a separate return, or $200,000 for anyone else.
Contribution limits are based on modified adjusted gross income
(gross income after itemized deductions).
The phase out for the total Child Tax Credit (i.a, the credit amount times the number of qualifying children) is $50 for each $1,000 (or part thereof) of modified adjusted gross income
above the thresholds.