Mon - Fri: 9:00a - 4:00p
5660 Marquesas Cir, Sarasota, FL 34233
We are CPAs located in Sarasota, FL
We hope you are all doing well. We are enjoying our first tax year in which we have not had a COVID or hurricane extension. We can actually get some administrative work done that has been on the back burner as well as perhaps get some rest.
Please follow us on Twitter and Facebook for regular tax updates. As much as we like the portal it is not good place for posting updates – we have a suggestion regarding that to Tax Dome that hopefully they will consider implementing. Until then it is best to follow us on social media. You can find links to our social media accounts on the right side of your portal when on the computer. When on a mobile device you will find the links down on the “More” icon. They are also as follows:
Facebook: https://www.facebook.com/profile.php?id=100064175431572
Twitter: https://www.x.com/SarasotaCPA
The government shutdown will affect our upcoming tax season. Currently the IRS is working to implement changes from the One Big Beautiful Bill Act (“OBBBA”) to their systems and forms. There is a good chance that filling season may start later than normal, although the deadline will not change. The biggest threat involves communication with the IRS. The IRS is getting backed up on responding to notices and processing amended returns due to the shutdown and budget cuts. We have seen amended return refunds taking almost a full year. It is critical that we try and minimize tax return notices, as responses can take a significant amount of time, resulting in higher invoices to clients than in the past. Responding to a notice via telephone can take a couple hours and will result in an invoice from us. The reduction in staff is shifting the cost from the IRS budget to taxpayers. We receive more notices due to incorrect estimated tax payments. We cannot “look up” your payments to the IRS, therefore it is important to report to us the dates and amounts of all your payments to the IRS.
Important – Due to an Executive Order, the IRS will no longer be issuing paper checks or accepting paper checks beginning with the 2025 tax year.
· Refunds - if tax returns do not provide bank information for direct deposit, a debit card will be issued. Debit cards can be lost or stolen, therefore we highly recommend furnishing your bank account information to us, preferably with the organizer.
· Payments due and 2026 Estimated tax payments – Payments can be made either at www.irs.gov/payments (IRS Direct Pay) or we can have the payments electronically drawn out of your account via EFW on the due date. We can set up EFW payments ONLY when we submit your tax return, we cannot set them up after the return is filed. Therefore if you do not wish to make payments on the IRS website, you must provide your bank information to us with the organizer or before the return is submitted. We will charge for re-doing your return to include that bank information if the return is already complete. The one drawback of EFW is that in order to turn them off or change them you will have to call the US Treasury. If you are planning on making payments on the IRS website, we recommend that you take a look at the website to familiarize yourself with the process – don’t do it the day the payment is due. We cannot make payments on the IRS website for clients. Please note, as of the date of this update, trusts and estates cannot use IRS Direct Pay. According to the IRS, currently trusts and estates can wire money to the IRS from their financial institution or use the Electronic Federal Tax Payment System (EFTPS). Trust and estate clients may want to start the process of registering for EFTPS in case Direct Pay is not available this coming year. Registration can be found at: https://www.eftps.gov/eftps/.
We suggest that taxpayers sign up for an online account with the IRS. Taxpayers with an online account can log into that account to:
· Simplify procedures for giving authorization to a third party to discuss taxpayers’ tax returns and accounts. This is much easier and quicker than signing form 2848, Power of Attorney and having to fax that to the IRS.
· Verify estimated tax payments.
· See the status of their tax return and refunds
Please note the following dates:
· Friday afternoons until December 31: the office is usually closed
· November 24 – 26,2025: office hours will vary, please call before coming to office
· November 27 – 28,2025: the office will be closed
· December 22 – 23,2025: office hours will vary
· December 24 – 26,2025: the office will be closed
· December 29, 2025– January 2, 2026: the office will be open but hours could vary, please callthe office before stopping by.
· December 31, 2025– January 1, 2026: the office will be closed
· January 5th– January 9th, 2026: Kelley and Marc will be out of the office
The portal is a great place to communicate and sign/share documents. It is for your convenience. We would like to remind those who do not regularly use the portal, that you may still drop your tax documents off at the office.
TaxDome has many helpful videos with instructions on navigation, uploading and downloading documents, communication, and billing. We strongly recommend clients visit and bookmark https://client-help.taxdome.com/category/4-getting-started/ for information and videos.
We cannot email documents that contain sensitive information. The IRS requires tax preparers to secure sensitive data. Some studies have reported that over 90% of identity theft begins with email. Many times the hacker monitors email without the user ever knowing. They gather location of accounts and obtain sensitive information like birthdates, relative names and social security numbers from prior emails and attachments. Much of that information is then sold on the dark web. When the user is either asleep or not online, passwords are reset and access can be obtained. Therefore we treat emails as if they are public information, because sometimes they are or will be.
We also encourage our clients to enable multi-factor authentication for all passwords to sensitive information. That way access cannot be obtained without a phone or authenticator application.
TAX SEASON
Individual tax returns will be due April 15, 2026. We request that your information be submitted to us as soon as possible. It is our practice not to submit returns the last few days before the deadline. There are too many risks to the electronic filing process, including rejected returns and software problems. Our goal is to have all returns either submitted or extended by April 13, 2026. If your return is not complete somewhere around April 8, 2026, it is very likely your return will be extended. We complete returns in first in- first out order so please submit your information to us when the majority of information is available. Given our backlog towards the end of tax season, please have all your information to us by March 23, 2026.
Options for getting us your information:
1. Scan/upload it to our portal. We will go through your information and create a list of missing information.
2. Mail your information to us.
3. Drop your information off at our office. The office is open from 8:30 – 4:00 M-F. You do not have to call to schedule a time to drop-off if made during business hours.
It is anticipated that electronic organizers will be available mid January 2026. We will also post a pdf of the old paper organizer in your Shared Documents folder. Some clients like to print and complete that version. Others use it as a reference for prior year information.
TAX LEGISLATION
One Big Beautiful Bill Act On July 4, 2025, the OBBA was signed into law. The Act changes funding for various federal programs, raises the debt ceiling, and makes numerous revisions to the Internal Revenue Code. This update includes many of those changes.
New Florida Laws Beginning October 1, 2025, Florida repealed the sales tax on commercial real estate rentals. This repeal applies to both state and local discretionary sales tax. Commercial leases less than 6 months are still subject to sales tax.
OTHER ITEMS
Partner Expenses Paid on Behalf of a Partnership: In Chopra v Commissioner, the Tax Court ruled that a partner could not deduct expenses paid on behalf of the partnership. In order for a partner to deduct expenses on behalf of a partnership in which they have an ownership interest, the partnership agreement must contain language that requires the partner to pay partnership expenses out of their own pocket. The decision is a reminder that if you pay expenses on behalf of a partnership, the expenses are not deductible unless the partnership agreement requires you to pay them.
IRS Wins More Cases Against Syndicated Conservation Easements: As mentioned in a previous update, the IRS is aggressively challenging and winning cases against syndicated conservation easements. In 2022 Congress passed legislation to prevent tax shelter abuse through the Charitable Conservation Easement Program Integrity Act. Many of the larger syndicated conservation easements have found themselves on the losing end of court decisions. While these arrangements are far less common than before, there are some promoters still trying to sell them to investors. Generally, these types of investments must make an additional disclosure to the IRS that flags their return.
Noncash Charitable Donations Denied: In Cade, the Tax Court denied a deduction of noncash items to charity because a qualified appraisal was not obtained. Taxpayers that make noncash donations of over $5,000 must obtain a qualified appraisal and attach that appraisal to their tax return. The taxpayer argued, to no avail, that Form 8283 served as a substitute appraisal.
Hobbies: In order to deduct expenses against income, the activity must be engaged with a profit motive otherwise the activity is classified as a hobby and expenses are not deductible. In two cases, the Tax Court applied IRS Regulations that include a nonexhaustive list of nine factors to find that the taxpayers’ activities were not engaged for profit.
In Bucci, the Tax Court applied the nine-factor test to a horse-racing activity and although the taxpayer ran the activity like a business and devoted most of his time to it, the prevailing factor was that the activity continuously had expenses greater than income. The taxpayer appealed to the Second Circuit and lost again.
In Himmel, the taxpayers horse breeding, training and raising activities failed several of the nine factors. The taxpayers earned some income from boarding and training, and over the 14 years had 2 sales of horses. There was a long history of losses with no substantial profits. They kept separate books and records, however the Court found that they had poor recordkeeping, commingled personal and horse expenses, and had no business plan to improve profitability of the recurring losses.
Medical Expenses: In a Letter Ruling, the IRS determined that a couples’ screenings, fertility medication and treatment, and egg and sperm retrieval in relation to in vitro fertilization were deductible. However the expenses related to gestation surrogacy were not deductible since the expenses were not incurred for the taxpayers’ or taxpayer’s dependent’s medical care.
IRS Direct File Program: The free IRS Direct File Program used by many students, dependents and low-income families will not be available in2026 and its future is on the brink of extinction.
ACA Bronze Plans Qualify as HSA Plans.: Beginning in 2026, all Bronze and Catastrophic plans under the Affordable Care Act now qualify taxpayers to contribute to HSAs. HSAs are the only vehicle offering triple savings. You can deduct amounts contributed, earnings grow tax free, and you can pull money out tax free to pay for medical expenses. Expenses from prior years count as qualified distributions and you can also distribute money to reimburse yourself for amounts deducted from Social Security for Medicare.
Roth Catch-Up Rule Final Regulations: The IRS issued final regulations addressing several SECURE 2.0 Act provisions. The final regulations include rules requiring that catch-up contributions made by certain higher-income participants be designated as after-tax Roth contributions. Effective for tax years beginning after 2025, participants whose wages for the preceding calendar year exceed $145,000 can only make catch-up elective deferrals as designated Roth contributions. If the plan does not provide for a designated Roth option, then those participants cannot make additional catch-up elective deferrals. This rule does not apply to SEPs or SIMPLE plans.
Inherited IRA by Trust: IRS Letter Ruling 202506004 allowed a trust that was the designated beneficiary of a retirement account to transfer the received funds from the decedent’s retirement accounts to individual inherited individual retirement accounts for individual beneficiaries of the trust through trustee-to trustee transfers. The IRS based their ruling on Rev. Ruling 78-406 and that the trust’s trustee could initiate the trustee-to-trustee transfer as long as each transferee IRA was set up and maintained in the name of the deceased IRA owner for the benefit of the beneficiary The result was that the trustee-to-trustee transfer was not considered to be taxable income to the trust or the beneficiary.
INDIVIDUAL TAX UPDATE
Rates: The OBBA generally makes the tax rates of 10%, 12%, 22%, 24%, 32%, 35% and 37% for individuals. The current 10%, 24%, 35% and 37% for estates and trusts are also made permanent.
Standard Deduction: The higher standard deduction was made permanent and indexed for inflation. For 2025 the amounts are:
· Single and Married Filing Separately (MFS): $15,750
· Head of Household (HoH): $23,625
· Married filling Joint (MFJ): $31,500
Personal Exemptions: The new law permanently terminates the personal exemption deduction, with an exception of a temporary deduction for seniors. For tax years 2025 through 2028, the deduction is $6,000 for each qualified individual. A qualified individual is:
1. The taxpayer, if the taxpayer has attained age 65 before the end of the year, and
2. In the case of joint return, the taxpayer’s spouse, if the spouse has attained age 65 before the end of the year.
The $6,000 amount is reduced by 6% of the taxpayer’s modified adjusted gross income (MAGI) that exceeds $75,000 ($150,000 for married filing joint).
Mortgage Interest: The mortgage interest deduction continues to be limited to interest on $750,000 of acquisition indebtedness. The new law reinstates the provision to treat mortgage insurance premiums as interest, which had expired for years after 2021. For years after 2025, premiums paid or accrued for qualified mortgage insurance in connection with acquisition debt are treated as qualified residence interest. The deduction phases out for taxpayers whose adjusted gross income is over $100,000 ($50,000 MFS). The bill allows taxpayers to continue to deduct mortgage interest on second homes, subject to the lower caps. However, no deduction is allowed for home equity indebtedness, unless it is incurred to improve your home. If you have multiple mortgages you will have to inform us which mortgages and home equity loans were incurred to buy or improve your home.
State and Local Taxes: Itemized deductions for all nonbusiness state and local tax deductions, including property taxes, are increased to $40,000 per household and phased out for taxpayers with modified adjusted gross income (MAGI) over $500,000. In 2029, the cap on deductions will revert back to $10,000.
NOTE: Trust are also given the $40,000 limit for each trust. There is a phase out for trusts beginning with MAGI of $500,000 and reverts back to a limit of $10,000 for MAGI over $600,000. Therefore, multiple non-grantor trusts may see a big benefit with the new law if subject to state taxes.
Miscellaneous Itemized Deductions: The new law permanently disallows a deduction for the miscellaneous expenses that were subject to the 2% of AGI limitation (investment expenses, tax preparation fees, employee job expenses, etc.). Effective for years beginning in 2026, a deduction for educator expenses as itemized deductions are allowed. The new law expands the list of expenses allowed as educator expenses. The deduction is not subject to the $250 ($300 for 2025 as adjusted for inflation) per educator limit.
Charitable Donations: For years beginning after 2025, taxpayers can deduct up to $1,000 ($2,000 MFJ) of cash charitable contributions without itemizing their deductions. Therefore if you usually do not itemize, you should still keep track of cash charitable contributions up to the limit amounts.
The new law also places a .5% floor on charitable contribution deductions for both itemizers and non-itemizers. The deduction is allowed to the extent that the aggregate amount of the taxpayer’s contributions for the year exceeds .5% of the taxpayer’s AGI. Disallowed deductions because of the .5% provision are carried forward under special ordering rules.
The new law also permanently extends the 60% AGI limitation for cash contributions.
Total Itemized Deductions Tax Benefit Limitation: Effective for years beginning after 2025, itemized deductions begin to phase-out when taxable income exceeds the dollar amount at which the 37% tax bracket begins (the highest tax bracket). The phase-out equals 2/37 (5.40540541%) of the lesser of:
· Itemized deductions otherwise allowable, or
· The amount of taxable income (determined without reducing itemized deductions under this rule) that exceeds the dollar amount at which the 37% tax bracket begins with respect to the taxpayer.
The phase out effectively caps the charitable deduction to 35% instead of the marginal rate of 37% for high income taxpayers. The phase-out does not apply when calculating the deduction for qualified business income.
Example: In 2025, a taxpayer with AGI of $1 million and $100,000 of charitable contributions in the 37% marginal tax bracket would have a $37,000 federal tax benefit. In 2026, the taxpayer will get a benefit of $33,250 ($1 million of AGI is subject to a .5% nondeductible floor, so the maximum charitable deduction is $95,000, and the deduction is calculated at the 35% tax rate). In this example, the new law changes result in an approximately 10% reduction in tax benefit for the same contribution amount.
In the above example, it would make sense for the taxpayer to accelerate contributions into 2025. Strategies to minimize this would be the use of Donor Advised Funds, accelerating 2026 contributions into 2025 and maximizing Qualified Charitable Distributions from IRAs if the taxpayer is over 70 ½.
Medical Expenses: Medical expenses exceeding 7.5 percent of adjusted gross income can be claimed as an itemized deduction for 2025. This remains unchanged.
Moving Expenses: The new law permanently repeals the deduction and exclusion for moving expenses for taxpayers who are not active members of the Armed Forces or intelligence community who move pursuant to a military order.
Casualty Losses: Taxpayers can only deduct casualty losses if the loss is attributable to a federally declared disaster or state declared disaster. The term “state disaster” disaster means any natural catastrophe (including any hurricane, tornado, storm high water, wind-driven water, tidal wave tsunami, earthquake, volcanic eruption, landslide, mudslide, snowstorm, or drought), or, regardless of cause, any fire, flood, or explosion in any part of the state, which in the determination of the Governor and the Secretary causes damage of sufficient severity and magnitude to warrant the application of this rule.
Gambling Losses: Effective for tax years beginning after 2025, the deduction for gambling losses is limited to 90% of such losses incurred during the year. The deduction is also limited to gains from gambling during the year.
Child Tax Credit: The child tax credit is nonrefundable and is made permanent. It increases to $2,200 per qualifying child under the age of 17 beginning in 2025 and indexed for inflation.
Child and Dependent Care Tax Credit: Amounts paid or incurred by an employer for dependent care assistance provided to an employee are excluded from the employee’s taxable income. For tax years beginning after 2025, the limitation on the excludable benefit amount is increased to $7,500 per year ($3,750 MFS).
Adoption Credit: For years beginning after 2024, up to $5,000 of the adoption credit is refundable. The amount is indexed for inflation.
Premium Tax Credit: The new law makes the following modifications to the PTC rules.
1. Effective for 2026, advance payments of PTC that are required to be paid back are no longer limited by the applicable dollar amounts.
2. Effective for 2027, certain aliens lawfully present must be “eligible aliens” to qualify for the credit.
3. Effective for 2027, the PTC is not allowed during periods of Medicaid ineligibility due to alien status.
4. Effective for 2028 State Exchanges must verify eligibility.
Student Loan Debt Discharged: For tax years beginning after 2025, discharges of student debt are excluded from income on account of death or total or permanent disability of the student.
Deduction for Qualified Tips: For tax years beginning after 2024 and before 2029, a deduction is allowed equal to qualified tips received during the tax year that are included on statements furnished to the taxpayer by the employer (or payee if the recipient is not an employee) or reported by the taxpayer on Form 4137. The amount allowed as a deduction for any tax year is limited to$25,000. Taxpayers do not have to itemize to take the deduction.
The deduction phases out when the taxpayer’s MAGI exceeds $150,000 ($300,000 MFJ).
If the taxpayer is self-employed, the deduction is limited to the net profit from the taxpayer’s trade or business that received the tips.
Qualified tips means cash tips (including credit card transactions) received by the individual in an occupation that customarily and regularly received tips on or before December 31, 2024. Qualified tips do not include amounts received in a specified service trade or business.
Payers subject to the information return reporting requirements must separately account for the amount of qualified tips paid to the payee.
Deduction for Qualified Overtime Pay: Effective for years beginning after 2024 and before 2029, a deduction is allowed to equal the qualified overtime compensation received during the year that is included on statements furnished to the taxpayer by the payee. The amount allowed as a deduction for any tax year is limited to $12,500 ($25,000 for MFJ). Taxpayers do not have to itemize to take the deduction.
The deduction begins to phase out when the taxpayer’s MAGI exceeds $150,000 ($300,000 MFJ).
Qualified overtime means overtime compensation paid to an individual required under section 7 of the Fair Labor Standards Act of1938 that is in excess of the regular rate at which the individual is employed.
Employers must separately account for the amount of qualified overtime compensation paid to the employee.
Qualified Passenger Vehicle Loan Interest Deduction: For years beginning after 2024 and before 2029, a deduction is allowed for qualified passenger vehicle loan interest. Passenger vehicle loan interest is any interest that is paid or accrued during the year on indebtedness incurred after 2024 for the purchase of, and that is secured by a first lien on, an applicable passenger vehicle for personal use. The deduction is limited to $10,000. It is an above-the-line deduction, so you do not have to itemize to take the deduction. The deduction phases out when the taxpayer’s MAGI exceeds $100,000 ($200,000 MFJ).
An applicable passenger vehicle is:
1. A vehicle that is originally used by the taxpayer (used vehicles do not apply),
2. A vehicle that is primarily manufactured for use on public streets, roads, and highways (off -road vehicles do not apply),
3. A vehicle that has at least 2 wheels,
4. A vehicle that is a car, minivan, van, sport utility vehicle, pickup truck or motorcycle,
5. A vehicle which is treated as a motor vehicle for purposes of title II of the Clean Air Act,
6. A vehicle which has a gross vehicle weight rating of less than 14,000 pounds, and
7. A vehicle in which final assembly occurs within the United States.
Note for 2025: The IRS gave lenders a reprieve from reporting automobile loan interest on IRS forms. Instead, taxpayers can use amounts provided to them by the lenders on an end-of-year statement for qualified loans.
Trump Accounts: Effective for tax after 2025, a person, such as a parent or grandparent can establish a Trump account for a beneficiary under the age of 18. A Trump account is a type of individual retirement account that allows earnings to grow tax deferred. Contributions are limited to $5,000 per year and are not deductible. Distributions are not allowed before age 18. Certain types of investments cannot be used to fund the accounts. Employers may make excluded contributions, limited to $2,500 to employees under the age of 18. A pilot program allows the IRS to make a $1,000 contribution to the account on behalf of the beneficiary born after December 31, 2024, and before January 1, 2029. The new law provides up to $410 million to fund the pilot program.
Termination of Clean Vehicle and Energy Efficient Credits: The new law accelerated the expiration dates of tax credits enacted under the Inflation Reduction Act of 2022 for purchasing electric vehicles and making energy efficient improvements to buildings. The expiration dates are:
· The Previously-Owned Clean Vehicle Credit expired for vehicles acquired after September 30, 2025.
· The new Clean Vehicle Credit expired for vehicles acquired after September 30, 2025.
· The Qualified Commercial Clean Vehicle Credit expired for vehicles acquired after September 30, 2025.
· The Alternative Fuel Vehicle Refueling Property Credit expires for property placed in service after June 30, 2026.
· The Energy Efficient Home Improvement Credit expires for property placed in service after December 31, 2025.
· The Residential Clean Energy credit expires to any expenditures made after December 31, 2025.
· The energy efficient commercial buildings deduction expires for property construction that begins after June 30, 2026.
· The new Energy Efficient Home Credit expires for home acquired after June 30, 2026.
In order to claim the Energy Efficient Home Improvement Credit (heat pumps, water heaters, central air conditioners, exterior windows and doors) you must obtain and include a 17 character qualified product identification number from the manufacturer. The credit cannot be claimed without this number.
Limitation of Excess Business Losses: Losses from the trades or businesses of a noncorporate taxpayer are limited if deductions from the businesses exceed gross income and gains from the businesses, plus a threshold amount. The inflation adjusted threshold amount for 2025 is $313,000 ($626,000 MFJ). Any disallowed excess business loss is carried over under the net operating loss (NOL) carryover rules. The limitation was set to expire for tax years beginning after 2028. The new law permanently extends the limitation on excess business losses.
Expansion of 529 Plan Expenses: The new law expands the types of expenses that may be used by 529 plans without penalty. Qualified expenses now include vocational training, apprenticeship programs, professional credential and licensing. The new law also increases the amount that can be paid for K-12 expenses to $20,000, but only to amounts paid after July 4, 2025.
Qualified Charitable Distributions: Although not new, we like to remind taxpayers of the ability to make contributions directly from IRAs. It is a very tax efficient way to give to charity. For 2025, up to $108,000 in qualifying IRA distributions to charity is excluded from gross income and can reduce taxes for taxpayers that are subject to certain income related phaseouts. Amounts contributed count towards a taxpayer’s required minimum distributions. To be qualified the taxpayer has to be at least 70 ½ years old. The distribution must be made directly by the IRA trustee to the eligible organization. Eligible organizations include publicly supported organizations (public charity), schools, churches, hospitals or government units. Nonqualified organizations include certain private foundations and donor advised funds. In general, if you meet the qualifications, charitable contributions should be made this way before making cash contributions out of non-retirement accounts.
We recommend that if you make qualified charitable distributions from your IRA to keep a copy of the statement showing the distribution as well as the acknowledgement letter from the charity to you as owner of your IRA.
IRA Rollovers: Just a reminder that taxpayers are allowed only one tax free IRA rollover every 12 months. IRA distributions deposited back into an IRA within 60 days are not includable in gross income. This limitation does not apply to trustee-to-trustee transfers.
Annual Gift Tax Exclusion: For 2025and 2026, the amount you may gift to any individual without reducing your giver’s estate and lifetime gift exclusion amount is $19,000. Spouses may “split” their gifts to each donee, effectively raising the per donee annual maximum exclusion to $38,000.
Qualified Business Income Deduction: The qualified business income deduction (QBID) has been made permanent. The new law increases the phase-out range for taxpayers that exceed the threshold amount. For 2026, the phase-out range is increased from $50,000 ($100,000 MFJ) to $75,000 ($150,000 MFJ). The new law also includes a new minimum deduction for active qualified trade or business income.
Estate Tax: The exemption is made permanent and raises the exemption to $15 million per individual ($30 million for married couples) in 2026 and indexed for inflation. The exemption for 2025 is $13,990,000 per individual ($27,980,000 million for married couples). Portability was untouched and still remains.
Capital Gains: In 2025, capital gains on property held for more than one year are taxed at a maximum of 20% (for married taxpayers the rate is 0% with incomes below $96,700, 15% with incomes between $96,701 and $600,050, and 20% with incomes over $600,050; for single taxpayers 0% with incomes less than $48,350, 15% with incomes between $48,351 and $533,400, and 20% with income over $533,400).
Medicare Income-Related Monthly Adjustment: Medicare Income-Related adjustment brackets can be found at https://www.ssa.gov/forms/ssa-44.pdf. Modified Adjusted Gross Income for this purpose is your Adjusted Gross Income (AGI) from your tax return plus tax exempt income. The brackets are a cliff and not a phase-in.
