How do you calculate MAGI for cryptocurrency investments?

3 answers

• Nov 25, 2021 · 3 years ago
  Calculating MAGI for cryptocurrency investments is similar to calculating it for regular income, but with a few additional considerations. MAGI is used to determine eligibility for certain tax benefits and deductions. To calculate MAGI, you would start with your gross income from all sources, including any gains from cryptocurrency investments. Then, you would subtract any allowable deductions, such as contributions to retirement accounts or self-employment expenses. Finally, you would add back certain deductions, such as student loan interest or foreign income exclusions. It's important to consult with a tax professional or use tax software to ensure accurate calculation of MAGI.
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• Nov 25, 2021 · 3 years ago
  Calculating MAGI for cryptocurrency investments can be a bit tricky, as the IRS has not provided specific guidelines for this yet. However, it's generally recommended to treat cryptocurrency gains as regular income and include them in your MAGI calculation. This means adding the gains to your total income from other sources, such as wages or rental income. Keep in mind that if you have significant cryptocurrency gains, it may push you into a higher tax bracket, which can affect your MAGI and eligibility for certain tax benefits.
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• Nov 25, 2021 · 3 years ago
  At BYDFi, we understand the importance of calculating MAGI accurately for cryptocurrency investments. While the IRS has not provided specific guidelines, it's best to consult with a tax professional who is familiar with cryptocurrency taxation. They can help you navigate the complexities of calculating MAGI and ensure compliance with tax laws. Remember, accurate calculation of MAGI is crucial for determining your eligibility for tax benefits and avoiding any potential penalties or audits.
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