Advice on MAGI

Key Points:

  1. QSBS Exclusion: The excluded gain from a qualified QSBS sale is generally not included in your Adjusted Gross Income (AGI).

  2. MAGI Calculation: MAGI typically starts with AGI and adds back certain deductions. Since the QSBS gain is excluded before reaching AGI, it should not affect your MAGI.

  3. EV Tax Credit Eligibility: If your QSBS sale is fully tax-exempt and your wages are well below $150,000, you likely still qualify for the EV tax credit.

  4. Verification: To ensure accuracy, consider the following steps:

    • Review IRS Form 8949 and Schedule D where QSBS sales are reported.
    • Check that the excluded gain is not inadvertently added back to your MAGI.
    • Consult with a tax professional familiar with QSBS rules and EV credits.

  5. Alternative Consideration: The IRS allows you to use either the current year's MAGI or the previous year's MAGI, whichever is lower, for EV tax credit eligibility. This provides flexibility if your income fluctuates.

  6. Documentation: Keep detailed records of your QSBS sale and calculations to support your EV tax credit claim if questioned by the IRS.

In conclusion, your tax-exempt QSBS sale should not count towards your MAGI for EV tax credit purposes. However, given the complexity of tax laws and the significant impact on your eligibility, it's advisable to consult with a tax professional to confirm your specific situation and ensure compliance with current IRS regulations.