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Jonathan Tierney
Jonathan Tierney, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 307
Experience:  Tax Accountant at Praxair, Inc.
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I have health insurance and my husband does not so I will have

Customer Question

I have health insurance and my husband does not so I will have to pay the penalty when I file my taxes. I do not qualify for exemption. Do I pay 2% of my income before deductions or after deductions?
Submitted: 8 months ago.
Category: Tax
Expert:  Jonathan Tierney replied 8 months ago.
Hi, my name is ***** ***** I can help. The penalty is based upon modified adjusted gross income (MAGI), which is your AGI on line 37 and 38 of Form 1040. This does not take into account itemized deductions. In addition, MAGI takes your AGI and adds back tax-exempt interest, Social Security, and foreign income. I hope this answers your question. Please let me know if I can clarify anything or answer any additional questions.Thanks, Jonathan
Expert:  Jonathan Tierney replied 8 months ago.
Itemized deductions reported on Schedule A which include state and local taxes, charitable contributions, mortgage interest, and medical deductions. That may be what you are referring to when you say deductions. There are also deductions for AGI listed at the bottom of page one of Form 1040.
Customer: replied 8 months ago.
Thank you, that's what I thought but am confused why it's referred to as modified adjusted income when there have been no modifications or adjustments made to it.
Expert:  Jonathan Tierney replied 8 months ago.
MAGI does have some adjustments to regular AGI, though most people do not have any of the adjustments. MAGI adds tax-exempt interest, Social Security not included in AGI, and foreign income that was not included in AGI.