AGI is the figure on the bottom of p 1 of your Form 1040, and is used for most general tax purposes such as eligility for certain tax credits and determining how much of a reduction is taken for itemized medical expenses and misc deductions. It also determines how much of social security income may be needed to be included in gross income.

Modified AGI is used to administer IRA accounts and starts with the above AGI figure, to which additions and subtractions are made which make sense for IRA purposes.

Some of the additions for traditional IRA MAGI include:
1) Traditional IRA deduction
2) Student loan interest and tuition and fees deductions
3) Foreign earned income and housing exclusions
4) Excludable savings bond interest and employer adoption benefits

For a Roth IRA MAGI you subtract the income from Roth conversions from AGI, and for Roth conversion purposes only you also subtract the taxable portion of any RMD taken.

Most of the additions are just deductions that happen to be “above the line” deductions and should not be counted for IRA contribution purposes, or for determining if a traditional IRA contribution is deductible or not. For a Roth IRA, a conversion will not affect the ability to make a regular contribution or to make conversions, and an RMD also does not affect the ability to do a Roth conversion.

MAGI could generally be described as actual income of a taxpayer, not artificial income caused by other deductions or Roth conversions.

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