Understanding Modified Adjusted Gross Income
This is the forth in a 12-part series of weekly posts on the 2009 Home Buyer Tax Credit. To see all the posts in this series, click here.
If you’re interested in taking advantage of the Home Buyer Tax Credit portion of the government’s extended stimulus package, it’s important to understand a bit about how your income is calculated to determine your qualifications.
The government-offered tax credits are offered to those who have a yearly income of $125,000 or less ($225,000 or less for married couples); however, this amount is not based on your gross income, but on your “modified adjusted gross income,” or modified AGI. To help you calculate your modified AGI, the IRS provides detailed instructions on page 17 of IRS publication 590.
You should also know that if your income falls within $20,000 of the maximum limits – $75,000 for individuals, $225,000 for couples – you may still be able to receive a partial credit. For example, if your modified AGI is just $10,000 over the limit (perhaps you and your spouse have a modified AGI of $235,000), you would still be eligible for 50% of the tax credit.
If you are in the market for a new home or are interested in upgrading, it’s worth taking a look at the possibility of qualifying for a tax credit. While you may think your salary is too high to qualify, you may be pleasantly surprised when you do the calculations and find that you, too, could receive a tax credit to purchase a new home.
You can find out more and download a free guide to tax credit information by clicking the following link:
Tue, Feb 9, 2010
Home Buyer Tax Credit Guide