How is your income calculated for the new tax credit?

Nothing about programs run by the government are ever simple. We know that. There is an $8000 credit for home buying couples with a Modified Adjusted Gross Income (MAGI) of $150,000 or less or home buying singles with a MAGI of $75,000 or less.

Would-be homeowners, use these rules when doing your taxes to establish your MAGI.

To arrive at your Modified Adjusted Gross Income (MAGI), start with your adjusted gross income and then add back the following items:
 Any deduction you claimed for a regular contribution to a traditional IRA.
 Any deduction you claim for student loan interest or qualified tuition and related expenses.
 Any income you excluded because of the foreign earned income exclusion.
 Any exclusion or deduction you claimed for foreign housing.
 Any interest income from series EE bonds that you were able to exclude because you paid qualified higher education expenses.
 Any employer-paid adoption expense you excluded.
 Any amount claimed as domestic production activities deduction.

Note that you are not required to add back any contribution you made to an employer plan such as a 401k plan. If you are running up against the limit for MAGI, one way to reduce that number is to make deductible contributions to an employer plan.