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As of 2025, the average cost of a wedding is approximately $36,000, according to data from Zola, a wedding registry platform. When you think about all that goes into a wedding, you may understand how the figure can get so high. There’s the venue (whether you book an event space or have a party tent in a backyard), food and drink, music, photography and videography, the dress and the ring, hair and makeup, flowers, and more.

But whether you want to have a destination wedding or one at home, you’ll likely want to understand what others spend, whether the average expense accurately reflects what most people pay, and how you can develop and wrangle your own budget. Read on for the need-to-know info so you can plan for what may just be the happiest day of your life.

What Is the Average Cost of a Wedding?

As noted above, the average cost of a wedding ceremony and reception for 2025 was documented at $36,000, according to Zola, a wedding registry platform. However, before thinking that you need to spend that much to get hitched, keep in mind a bit of basic math about average vs. median wedding costs.

•   Averages can be inflated by a few super-luxe weddings in the mix. To get the average, you add up the data points and then divide by the number of data points.

For instance, if eight out of 10 people spend $10,000 for their big day and two people spend $125,000 each, the average cost would be $33,000. Even though just two couples splashed out, it looks as if everyone is spending a sum of over $30K.

•   Because of how a few high figures can skew data, it may be more meaningful to look at the median cost. When a median is calculated, the data points are arranged from smallest to largest, and the median is the middle value for sets with an odd number of data points. When there is an even number of data points, the median is the average of the middle two.

If you use the same values as above, the median would be 10,000, because you are only looking at the middle two values when the 10 data points are arrayed from smallest to largest. In other words, the big spenders get eliminated.

So what would the current median cost of a wedding be? SoFi’s most recent research found that the median cost of a wedding is about $10,000.

Wedding costs will vary based on how elaborate the event and the unique vendor and venue costs of the region.

And whether typical costs are closer to $10,000 or $36,000, that’s a considerable investment: a five-figure amount to pull together or to finance with, say, a personal loan.

Average Wedding Cost by State

You’ve just learned that average wedding costs may be inflated vs. median costs. However, most of the world tallies data as averages. Here, you’ll see how much an average wedding costs by state, according to the most recent data from the wedding platform The Knot. Keep in mind that if you were to use medians, the dollar amounts could be significantly lower.

The price tag associated with this fantastic celebration for the couple and their friends and family differs by state. The variations in amounts may reflect how the cost of living by state can vary. This is where things stand as of 2025:

•   Alabama: $27,000

•   Alaska: Not available

•   Arizona: $26,830

•   Arkansas: $18,700

•   California: $39,170

•   Colorado: $31,130

•   Connecticut: $40,300

•   Delaware: $38,880

•   District of Columbia: $42,480

•   Florida: $32,560

•   Georgia: $28,800

•   Hawaii: $32,280

•   Idaho: $17,380

•   Illinois: $38,100

•   Indiana: $24,380

•   Iowa: $20,080

•   Kansas: $20,000

•   Kentucky: $21,680

•   Louisiana: $33,240

•   Maine: $36,000

•   Maryland: $39,460

•   Massachusetts: $45,000

•   Michigan: $28,330

•   Minnesota: $27,440

•   Mississippi: $21,280

•   Missouri: $25,040

•   Montana: $20,050

•   Nebraska: $20,870

•   Nevada: $19,890

•   New Hampshire: $36,080

•   New Jersey: $54,500

•   New Mexico: $22,260

•   New York: $47,800

•   North Carolina: $29,060

•   North Dakota: $21,080

•   Ohio: $28.300

•   Oklahoma: $19,590

•   Oregon: $23,290

•   Pennsylvania: $35,310

•   Rhode Island: $49,180

•   South Carolina: $36,170

•   South Dakota: $20,750

•   Tennessee: $24,040

•   Texas: $30,000

•   Utah: $17,380

•   Vermont: $44,720

•   Virginia: $33,760

•   Washington: $26,380

•   West Virginia: $19,080

•   Wisconsin: $28,730

•   Wyoming: $16,750

Recommended: Wedding Cost Calculator

Average Wedding Cost in Major US Cities

In general, cities can be expensive. The cost of living can be higher because the demand is more intense.

Here, according to The Knot, is how much it costs on average to finance a wedding in some popular American cities, in descending order:

•   New York City: $87,700

•   Chicago: $54,190

•   San Francisco: $51,500

•   Boston: $51,260

•   Los Angeles County: $44,740

•   Philadelphia: $40,230

•   Houston: $33,000

•   Detroit: $32,000

•   Dallas/Fort Worth: $31,580

•   Denver: $31,440

•   Seattle: $31,320

•   Phoenix: $27,040

•   Las Vegas: $22,140

•   El Paso: $20,490

Average Wedding Cost by Number of Guests

If you’re curious about how the number of guests will impact your wedding costs, consider this data about getting married from The Knot. In 2025, the most recent year studied, the average number of guests at a wedding was 116, up slightly from the year prior.

Of course, just because that’s the average number of attendees doesn’t mean it’s right for you. Some people with large families and circles of friends could have twice that amount, while others might prefer an intimate ceremony with just one or two dozen guests.

In terms of cost per guest, the latest figures are $284 per person. Once again, keep in mind that these are averages, and the median cost could be significantly lower. Nevertheless, that can be a considerable sum to pay. Looking into wedding loans could be a wise move.

Average Wedding Cost by Generation

Here’s a look at how age may impact your wedding costs. The wedding cost data from the most recent year studied (2025) reveals the following:

•   Average cost for Gen Z wedding: $27,000

•   Average cost for Millennial wedding: $38,000

•   Average cost for Gen X wedding: $23,000

Notably, Gen Z weddings tend to be smaller in size than those of older couples, which could explain the lower price. In addition, Gen Xers (born between 1965 and 1980) may have lower costs since they are older and have other financial priorities than a blowout bash (such as educational costs for children from a prior marriage or a mortgage).

Average Wedding Cost by Month

The time of year during which you host your wedding can impact the cost. Interestingly, in generations past, June used to be the most popular and in-demand month for weddings. That’s a factor that can drive up costs. Now, September and October are the most popular months to get hitched.

However, there are regional differences in when people marry (for instance, a Florida February wedding will be very different from one in Maine), and many other factors impact which date you’ll pick. Here, a look at average costs by time of year to help you plan your budget well:

•   January-March wedding: $32,000

•   April-June wedding: $33,000

•   July-September wedding: $34,000

•   October-December wedding: $32,000

Recommended: The Cost of Being in Someone’s Wedding

The Takeaway

The current average cost of a wedding in the U.S. according to the data is $36,000. However, median costs of a wedding reveal a significantly lower figure of $10,000 for the big day. Keep in mind that average costs are just that: an average made up of numerous data points. It’s not how much you will or must spend. Planning a wedding doesn’t have to be a budget breaker, and there are various ways to finance the event, including gifts from family and personal loans. Think twice before turning to high-interest credit cards; a personal loan could be a wiser choice.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

SoFi’s Personal Loan was named a NerdWallet 2026 winner for Best Personal Loan for Large Loan Amounts.

FAQ

What is the average cost of a wedding in the United States compared to the rest of the world?

The average cost of a wedding in the U.S. is currently $36,000, and the median is $10,000. Wedding costs in America tend to be higher than elsewhere in the world, but figures vary tremendously depending on location, wedding size, and details of the ceremony and celebration.

What is the average cost of a destination wedding?

The current average cost of a destination wedding is $39,000, although the exact price can vary depending on where the wedding takes place, travel expenses, and size and style of the wedding.

How much should I plan to spend for a wedding with 100 guests?

Currently, the average cost per person for a wedding is $284, so a wedding for 100 guests would require a budget of $28,400.

What’s the best way to estimate the costs of a wedding?

In addition to looking at the data and talking to friends and wedding professionals, you can develop a budget and research costs for your intended ceremony, such as venue rental, flowers, music, dress, catering, and more.

Are there different ways to pay for a wedding?

Yes, there are options for financing a wedding, including savings, gifts of money from family and friends, and securing a personal loan.

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Hiring a tax preparer can give you some peace of mind that your taxes are being filed correctly. But even a pro can sometimes make a mistake. Depending on the error, you could end up getting a refund you’re not entitled to or paying more in taxes than you actually owe.

The good news is, there are ways to get your tax return back on track if an error was made. Keep reading to learn what steps you can take when you realize your tax preparer made a mistake.

Who Are Tax Preparers?

There are different types of tax return preparers, but typically, they’re enrolled agents, attorneys, or certified public accountants (CPAs). There is no professional credential that qualifies someone to be a tax preparer. However, they do need to have an IRS Preparer Tax Identification Number (PTIN) in order to help clients file their tax returns.

Because a tax preparer is dealing with your sensitive financial information, it’s important to do your due diligence before hiring one. Research potential tax preparers’ backgrounds and references, and if possible, ask for referrals from trusted friends and family members. It’s also a good idea to look for a tax preparer who specializes in the types of taxes you need help with, such as self-employment taxes.

Pros and Cons of Working With a Tax Preparer

Thinking about enlisting the help of a professional as you prepare for tax season? You may want to consider the advantages and disadvantages of working with a tax preparer.

Pros

•   Ample experience (if you hire the right professional)

•   Expert insight into potential tax credits and deductions

•   Peace of mind that your taxes are filed properly

Cons

•   May be more expensive than doing your own taxes

•   Mistakes can still happen

•   Less privacy

Another way to make getting ready for tax season easier is to gain a holistic picture of your financial life. A money tracker app like SoFi’s can allow you to track spending, set financial goals, and view all bank account balances in one place. You can also monitor credit scores.

Recommended: How Much Do I Have to Make to File Taxes?

Are Tax Preparers Worth It?

Whether or not a tax preparer is worth the money depends on a few different factors. These may include:

•   How much time it saves you. If you have complicated taxes or are concerned you might miss the tax filing deadline, you may find that an hour or so with a professional tax preparer is more efficient and therefore worth the cost.

•   The complexity of your taxes. People who only have one source of W-2 income, take the standard deduction, and have no investments may be able to easily file their taxes without the help of a tax preparer. However, a small business owner dealing with payroll or a freelancer with dozens of sources of income may find that hiring a tax preparer could save them a lot of headaches.

•   The tax preparer’s experience. An experienced, qualified tax preparer can ensure your returns are prepared correctly and perhaps even help you identify tax credits or deductions.

•   Cost. Some tax preparers charge the same or slightly more than the cost of purchasing tax preparation software, while others are on the more expensive side. Depending on your needs, hiring one may or may not be worth budgeting for.

Fixing Errors on Filed Returns

If you realize your tax preparer made an error on your filed tax return, all is not lost. You can amend it using Form 1040-X, Amended U.S. Individual Income Tax Return. Common errors include having the wrong information regarding income, credit, tax liability, filing status, or deductions.

It’s also possible to amend a return in order to claim an unused tax credit. Generally, mistakes on an income tax return need to be amended within three years (this includes extensions).

Am I Responsible If My Tax Preparer Makes a Mistake?

While it may seem like the professional tax preparer would be on the hook for any mistakes made on income taxes they help file, it’s the taxpayer who’s held responsible. However, the tax preparer can help make any necessary corrections.

What Happens If a Tax Preparer Messed Up Your Return

If you realize your tax preparer made a mistake (or multiple mistakes) on your income tax return, you need to file an amended return with the IRS. Ideally, the tax preparer would help with this process, but they aren’t required to do so.

What to Do If a Tax Preparer Messed Up

Mistakes happen. Here are the steps you can take to get things back in order in the event your tax preparer makes an error on your income tax return.

Make Sure It’s the Preparer’s Fault

Before you start pointing fingers at the tax preparer, make sure they’re the one who made the mistake. Tax preparers require a lot of detailed information so they can file an income tax return on your behalf, and it’s easy to give them the wrong information by mistake. Do some digging to see who’s really at fault and what to do if you’re missing tax documents.

Check Your Contract

Once you’re certain the tax preparer made a mistake, take a look at the contract you signed with them. It should outline whether the preparer will file an amendment for you at no extra charge and what their liabilities are.

Contact the Preparer

The next step would be to contact the tax preparer to alert them of the mistake and to provide them with any related correspondence from the IRS.

Notify the IRS and Professional Organizations

If the mistake is substantial — and not your fault — you’ll need to convince the IRS of the tax preparer’s negligence. You may also want to outline any damages you’ve suffered as a result of the error. The IRS is then responsible for investigating who is responsible. If the tax preparer is at fault, this can result in their tax identification number being rescinded.

It’s also possible to report the tax preparer to a professional organization they belong to, like the American Bar Association or the American Institute of Certified Public Accountants.

Tell It to the Judge

Ideally, the tax preparer will help you remedy the mistake, and everyone can go on their merry way. However, if the error caused a lot of issues for you, you may choose to sue for negligence. Taking the issue to a judge is a last resort, but it’s an option if you want to file a standard professional malpractice complaint with your state court.

Recommended: Free Credit Score Monitoring

The Takeaway

Even the most qualified tax preparers can sometimes make a mistake. If a tax pro made an error on your tax return, all is not lost. The IRS allows you to fix errors on an income tax return, and in most cases, your tax preparer should be willing to help out. If you suspect the preparer was negligent when filing your return, you can report them to the IRS. As a last resort, you can even sue them (though hopefully it would never come to that).

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

Is a tax preparer liable for mistakes?

At the end of the day, even if the tax preparer is the one to make the mistake, the taxpayer is the one held liable by the IRS. That said, some contracts with taxpayers do include taking responsibility for errors.

How much money will the IRS fine a tax preparer who has made a mistake filing a client’s taxes caused by lack of due diligence?

Simple mistakes are one thing, but if a professional tax preparer doesn’t follow tax rules, regulations, or laws, they can be penalized financially by the IRS. The amount of that fine depends on different factors, like how many violations occurred.

Can you report a tax preparer to the IRS?

Yes, it is possible to report a tax preparer to the IRS. It’s important to submit a detailed report to the IRS and to outline any damages suffered.

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Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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For some people, freelancing is the way they earn their living, relishing the freedom and flexibility of this type of work. For others, it’s a smart way to bring in some income in addition to a salary. Regardless of whether you’re managing your freelance business as a full-time endeavor or a side hustle, one fact is true: You’ve got to pay taxes on your earnings.

In this guide, you’ll learn about the steps to take in your situation, including:

•   How do you pay taxes as a freelancer?

•   Why are freelance taxes higher?

•   What are some ways to reduce taxable income?

•   What deductions should freelancers take?

•   What should freelancers know about tax refunds?

How Taxes for Freelancers Are Different

The first thing to note is that taxes for freelancers are notably different in two major ways: Freelancers pay a larger percentage of their income (because of self-employment tax), and they’ve got to make estimated tax payments every quarter.

What Is Self-Employment Tax?

The self-employment tax rate is 15.3%. That’s 12.4% for Social Security and 2.9% for Medicare.

That doesn’t mean that’s all that freelancers pay. Self-employment tax is what freelancers pay on top of regular income taxes. The percentage you pay in income taxes depends on what tax bracket you’re in but can range from 10% to 37%.

Why do freelancers pay a self-employment tax? When you’re an employee for a business who receives a W-2 form, your company pays some taxes for you.

But if you’re a freelancer — whether a writer, photographer, dog walker, or consultant — your clients don’t pay any taxes for you, so you’ve got to pick up the slack.

And don’t forget: You may also have to pay state and local taxes, depending on where you live.

What Are Quarterly Taxes?

Most people think of April 15 as the dreaded Tax Day for all Americans, when they have to pay their taxes. But taxes aren’t actually due on April 15: They’re due when you earn the money.

That’s why employers withhold taxes from every paycheck. Tax season is just that special time where the IRS wants you to go over the numbers and make sure the right amount was withheld — and pay up if you actually owe more. (Or, if you overpaid, file your return to claim a refund.)

But since taxes aren’t withheld when freelancers earn revenue from clients, the government expects freelancers to make quarterly tax payments throughout the year.

Freelancers have two options:

1.    Pay 100% of the taxes they owed the prior year, split over four payments.

2.    Pay 90% of the taxes they’ll owe for the current year, split over four payments.

Note that these percentages may be different if you’re a farmer, fisherman, or high-income earner.

Estimated taxes are among the most complicated parts of being a freelancer, and you can face underpayment penalties if you don’t send Uncle Sam your fair share throughout the years.

You can check out the IRS’s guidelines for estimated taxes , but a tax professional may be worth the cost if you’re confused.

💡 Quick Tip: Typically, checking accounts don’t earn interest. However, some accounts do, and online banks are more likely than brick-and-mortar banks to offer you the best rates.

Paying Taxes as a Freelancer

Now that you understand that freelancers must pay more in taxes and that they need to keep track of more tax deadlines, consider the actual process for freelancer tax filing.

Here’s how to pay freelance taxes in five steps.

1. Determine If You Have to Pay Freelancer Income Tax

First and foremost, it’s a good idea to make sure you actually have to pay freelancer taxes. If you fit the bill of the IRS’s definition of an independent contractor, you’ll have to file as a freelancer and will be subject to self-employment taxes.

The IRS says you’re an independent contractor “if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.”

It’s a rather broad designation and might fit traditional freelance gigs like writers and graphic designers, but it can also apply to app-based workers, like drivers for Uber and Lyft, and even doctors, lawyers, and veterinarians.

Even if you receive a W-2 from an employer but made other revenue on the side, you’re still subject to freelancer income taxes — and must make estimated payments on that income.

2. Calculate How Much You Earned

As a freelancer, you may receive 1099-NECs from clients for the work you do, detailing just how much money you made from them. For the 2025 tax year, clients must issue a 1099-NEC if they pay a freelancer $600 or more; this threshold will increase to $2,000 for payments made in 2026, with adjustments for inflation thereafter.

Even if you don’t receive a 1099, you still have to report any income you made on your tax return. This means paying taxes if you are paid on Venmo or another platform versus by check or a direct deposit.

If you don’t declare the income, you’re committing tax fraud — and the IRS can find out during an audit.

You may want to use a tax preparation checklist to help you organize these materials. You might start by compiling all your 1099-NECs and any other income forms, including 1099-INTs, 1099-Ks, 1099-MISCs, and W-2s, and then input them on your tax return or into your tax software. If you have additional income not represented by any forms, you’ll be able to report that as well.

3. Compile Your Business Expenses

As a freelancer, there are several tax deductions that can cut your business tax bill and protect your profits. These deductions include a broad range of ordinary and necessary costs associated with running your business.

Common Tax Deductions for Freelancers

Business expenses can vary significantly depending on the kind of work you do, but you may be able to to use some of these freelancer tax deductions, like:

•   A portion of your rent or mortgage (your home office deduction)

•   Phone and internet bills

•   Any computer and software expenses

•   Automotive expenses, including miles on your car when used for business (and only for business)

•   Office supplies

•   Travel expenses

•   Marketing and advertising expenses

•   Continuing education

Freelancers may also be able to take the qualified business income deduction and self-employment tax deduction.

Other Tax Deductions and Tax Credits

Business expenses may apply to freelancers specifically, but independent contractors can take advantage of other common tax deductions and credits.

If you itemize rather than take the standard deduction, you may be able to deduct mortgage interest payments, charitable contributions, and the state and local taxes. And if you have education debt, you may be able to take the student loan interest deduction.

Tax credits are also a useful tax tool and can greatly reduce your tax bill as a freelancer. Some popular tax credits include the child tax credit, Earned Income Tax Credit, and electric vehicle tax credit.

Recommended: Fastest Ways to Get Your Tax Refund

4. Account for Estimated Payments

If you made estimated tax payments the previous year, don’t forget to apply those to your tax form when filing. After all, if you’ve handed over a chunk of change to the IRS already, you’ll want credit for it.

You’ll add your total payments to line 26 on Form 1040 if filling out the form yourself, but most tax software and accountants should prompt you for this information.

5. File and Calculate Estimated Payments

The last step in how to pay freelance taxes: You’re now ready to complete your forms, and send in your tax return and any payments that you owe. And it’s not necessarily just federal taxes that are needed for freelancer tax filing: Depending on where you live, you may owe state, local, and school district income taxes as well.

After filing, surprise: You’re not done yet. You’ll also need to estimate taxes for the current year. Your first quarterly payment is due on Tax Day in April.

If you’re working with an accountant, they can help you calculate how much you’ll likely owe and print out vouchers for you to mail in with your payments. If you wind up making significantly more or less throughout the year, you can adjust your estimated payments to match. That’s part of learning how to budget on a fluctuating income.

Freelancer Tax-Filing Tips

Freelancing and taxes can seem complicated. Here are tips to help you save money and hit all your deadlines.

Plan for Retirement as a Freelancer

Reducing your taxable income is helpful when you have to pay significantly more in taxes on your earnings. One way to do this — and prepare for your future — is to open a retirement account and make pre-tax contributions.

You can contribute to a traditional IRA, but there are also retirement plans designed for self-employed individuals, including a SEP IRA and a solo 401(k). It’s worth educating yourself about how these work and contribution limits so you can find the best option for your financial situation and aspirations.

Research Deductions

You may be tempted to take the standard deduction when filing, but if you have a lot of business expenses, you may earn a larger tax break by itemizing. Tax software and accountants generally know all the different types of taxes and guidelines. They can help you find all the tax deductions you qualify for, but it never hurts to do some research on your own.

Stay Organized

Organization is crucial when running your own business — and that holds true at tax time. By organizing your bills and tracking your income throughout the year (even on a daily basis), you should have good records of all your revenue and expenses.

Find record- and receipt-keeping systems that work for you. You may also want to set calendar reminders so you never miss a quarterly tax payment deadline.

Work with a Tax Professional

Freelancer income taxes can be challenging and confusing. If you’re overwhelmed and worried about making a mistake, it may be worth the money to hire an accountant or tax preparer.

Plus, the tax-filing fee may count as a deductible business expense for next year.

Understand Tax Refunds for Freelancers

Know that it is unlikely that you’ll get a tax refund as a freelancer. What often triggers a tax refund is that a full-time employee had too much money withheld for taxes from each paycheck and their overpayment comes back to them. (They can adjust their W-4 employee withholding tax form to avoid this situation in the future.)

But as a freelancer, it is unlikely you are overpaying your taxes, especially if you are tracking your income and paying the appropriate amount of quarterly taxes.

Recommended: Maximizing Your Time and Money

The Takeaway

Taxes can get more complicated if you’re a freelancer. You likely will pay more in taxes (thanks to the self-employment tax), and you’ll probably need to make quarterly estimated payments. It’s wise to regularly track and review your earnings and expenses so you can stay on top of how you are doing. For many freelancers, working with a tax professional is the best path forward.

Also worth noting: As a freelancer, you need several tools to stay organized and run your business, including a bank account.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy 3.30% APY on SoFi Checking and Savings with eligible direct deposit.

FAQ

Why is freelance tax so high?

Freelance taxes are higher because they include self-employment tax. This additional 15.3% is what employers traditionally pay on behalf of their employees. In the case of freelancers, they’re both the employer and the employee so they have to cover that amount.

Do I need to declare freelance income?

Yes, you must declare all freelance income. Even if you didn’t make enough to trigger a 1099 from a client — or that client forgot to send you a 1099 — you must report any and all income to the IRS.

What happens if you don’t file freelance taxes?

If you don’t make quarterly tax payments as a freelancer, you could be subject to underpayment penalties when you go to file. If you don’t pay at all, you’ll be subject to Failure to File and Failure to Pay penalties. You’ll owe interest on top of the fines — and eventually could face jail time if you don’t pay.

Can freelancers pay taxes annually?

While freelancers must file taxes annually like everybody else, they are usually required to make quarterly estimated taxes since no taxes are being withheld from their payments throughout the year.

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Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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Learning that you are eligible for a tax refund can be a welcome surprise. Or maybe it’s something you’ve been hoping (or even waiting for) for months.

If you have any pressing expenses — maybe you’re behind on a few bills or have been putting off going to the dentist because of the cost — you may be wondering how you might be able to get that money into your hands ASAP.

Fortunately, there are a few simple things any taxpayer can do to help ensure that their refund comes quickly.

This includes e-filing with the IRS (rather than physically mailing in your return) and setting up direct deposit, so there’s no waiting for that refund check to come through the mail.

Read on to learn more about getting your tax refund sooner, including:

•   How to plan your tax return filing

•   How to file electronically

•   How to set up direct deposit

•   How to track your refund

Quickest Ways to Get Your Tax Refund

Here are some key steps you may want to take as tax season gets underway, starting well before Tax Day in April. They’ll help ensure that you get your refund ASAP.

1. Start Planning Your Tax Return Filing in January

In general, the fastest way to get your tax refund is to file your taxes early, and you certainly don’t want to miss that tax-filing deadline.

This means that, starting in January, you may want to begin collecting all the necessary information for filling out your tax forms, such as your W-2 and any 1099s. You’ll also likely need to decide whether you are going to file on your own (perhaps using tax software) or hire a tax preparation service or accountant to help.

2. Get Your Return in ASAP

The further into tax season that you file, the more likely the IRS is to be inundated with returns. That can slow processing times, which can delay your refund.

If you followed Step 1, above, then you’ll have your documentation organized. All of the forms you need should be issued by January 31.

If you prefer working with a professional tax preparer, it’s wise to book them in advance, since they’ll likely be very busy with other clients. If you plan to use tax software, buy it early and learn how to use it. You’ll be ready to be one of the first filers out of the starting gate.

3. File Your Tax Return Electronically

One of the fastest ways to get your refund can be to choose electronic filing instead of sending your return by mail.

That way, your refund can begin moving through the system immediately, rather than having to wind its way through snail mail and hands-on processing.

A paper tax return can take about six to eight weeks to process, but with electronic filing, or e-filing, taxpayers can typically expect to receive their refund within 21 days. Your tax preparer will usually offer ways for you to file electronically.

Taxpayers can also use tax preparation software such as TurboTax, TaxSlayer, TaxAct, or H&R Block. You can use these programs to file your taxes yourself, or you might go to a professional who knows how to use this type of software. Either way, electronic filing is probably an option.

4. Get Help Filing Your Return Quickly

But what if you don’t have funds for tax help and are feeling overwhelmed by the process and therefore don’t file right away? Fortunately, help is available. The Internal Revenue Service (IRS) offers a few options for
e-filing which can help you get this task completed.

If taxpayers make an adjusted gross income (AGI) of $84,000 or less per year, then they can use IRS Free File to turn in their tax forms.

For taxpayers whose AGI is greater than $84,000, they can use the IRS’s Free File Fillable Forms service, which lets you simply input your data onto your tax forms so you can e-file (if you choose this option, you’ll need to know how to prepare your own tax return).

The IRS Volunteer Income Tax Assistance (VITA) and the Tax Counseling for the Elderly (TCE) programs also provide help and e-file for taxpayers who qualify.

Many states also offer free e-filing options for state returns.

The IRS has a helpful tool on their website where taxpayers can find an authorized IRS e-file Provider
Locator . All taxpayers have to do is input their zip code and choose what kind of provider they need.

5. Set Up Direct Deposit

How else to get your refund fast? The speediest way to get your tax refund is to have it electronically deposited into your financial account. This is known as direct deposit, and the service is free. It’s also possible to break up your refund and have it deposited into one, two, or even three accounts.

You can set up direct deposit simply by selecting it as your refund method through your tax software and then inputting your account number and routing number (which you can find on your personal checks or through your financial institution).

Or, you can tell your tax preparer that you want direct deposit.

It’s also possible to select direct deposit if you’re filing by paper and sending your return through the mail (you may want to double check to make sure you didn’t make any errors inputting your financial account information). But remember, paper returns tend to move through processing more slowly.

💡 Quick Tip: As opposed to a physical check that can take time to clear, you don’t have to wait days to access a direct deposit. Usually, you can use the money the day it is sent. What’s more, you don’t have to remember to go to the bank or use your app to deposit your check.

6. Open a Bank Account If You Don’t Have One

If you just read the step above and thought you can’t use direct deposit because you don’t have a bank account, this could be the moment to set one up. Perhaps you haven’t gotten around to opening a checking or savings account. Now is a great moment to open one. Many online banks can guide you through the application and opening process online, from your home, in a minimal amount of time. This can be an excellent move as you prepare for tax season.

If you were previously turned down for a bank account, you might want to look into what are known as second chance accounts. Offered by some banks and credit unions, these may not have all the features of conventional accounts, but they can give you a good landing pad for your tax refund via direct deposit.

Recommended: What Are the Different Types of Taxes?

When Can I Expect My Tax Refund?

As long as taxpayers have e-filed by the deadline and chosen direct deposit, then the refund should hit their account within three weeks. According to the IRS, nine out of 10 refunds arrive in less than 21 days. However, if you file a paper return, the timing will more likely be six to eight weeks.

And, remember, if you file later in the tax season, you might face processing delays. That’s because the volume of returns working their way through the IRS rises significantly. So being an early bird can be among the quickest ways to get your refund.

Recommended: What Is Income Tax Withholding?

Finding Out Where Your Refund Is

Once everything is filed, taxpayers can check their tax refund status on the IRS’s Where’s My Refund? page. This requires inputting your Social Security number, filing status, and the exact amount of the refund, which can be found on the tax forms that were submitted.

Can I Track the Status of My Tax Refund?

Taxpayers can check “Where’s My Refund?” starting 24 hours after e-filing.

The site is updated daily, usually at night. The IRS cautions that you may experience delays in getting your refund if you file by mail, or you are responding to a notice from the IRS.

If it’s been more than 21 days and you still haven’t received your refund, you can call the IRS at (800) 829-1040 for help. You may also want to contact the IRS if “Where’s My Refund?” instructs you to do so.

Can You Get Your Tax Refund Back the Same Day?

Unfortunately, there is currently no way to get a tax refund back the same day. The speediest timing tends to be closer to eight days from e-filing to direct deposit of a refund.

However, if taxpayers are in a bind, some tax preparation services offer 0% interest tax-refund loans. Tax-refund loans, also called “refund advances,” allow you to access your refund early, but you may want to keep in mind that tax preparers typically charge fees for filing tax returns.

If you are paying a tax preparer just to get the advance, you’ll essentially be paying a company in order to access your refund. Consider these points:

•   Some providers may charge an additional fee for the advance service.

•   These short-term loans range from $200 to $4,000. In some cases, there may be a minimum amount your refund must meet in order to qualify for a refund advance (how much can vary from one company to another).

•   You may only get part of your expected refund in advance.

•   Some companies may offer to give you a prepaid card with the loan amount on it within 24 hours.

•   Once your tax refund is issued, the tax preparer will typically deduct the loan amount from your refund.

Also be aware that you may be offered this kind of quick cash from other non-bank lenders with significant fees. Proceed with caution.

If you’d rather not pay any fees, however, you may also want to look into other options.

•   If you have bills that are due, it may be worth calling up your providers or credit card companies to see if they can extend their due date while you are waiting for your refund.

•   You might open a 0% interest credit card, such as a balance transfer one, and charge an urgent expense on that card and then pay it off as soon as the refund comes in.

What’s the Best Way to Spend Your Tax Refund?

Finally! Your tax refund has arrived. You may wonder about the best way to use the funds. Yes, it can be tempting to splurge on a weekend away or those new boots you’ve had your eye on, but consider this financially-savvy advice first:

•   If you are carrying any high-interest debt, one smart move might be to put your tax refund towards minimizing the debt or, if possible, wiping it out all together. Doing this can help you avoid spending more money on interest charges. It may also help boost your credit score, which may help you qualify for loans and credit cards with lower interest rates in the future.

•   Or you might consider using your tax refund to jump-start one of your current savings goals, such as building up an emergency fund, a downpayment on a home, or buying a new car.

For an emergency fund or savings goals you hope to accomplish within the next few years, you may want to put your refund in a high-yield savings account. These options typically offer a higher return than a traditional savings account but allow you easy access to your money when you need it.

•   Your tax refund can also help you start saving for the longer term, such as retirement or paying for a child’s education. Using a tax refund to buy investments can help you create additional wealth over time to help fund these far-future goals.

The Takeaway

To get your tax refund as quickly as possible, it’s a good idea to file early, and, if possible, avoid the mail. That means filing electronically (using the IRS’s free service or tax software, or hiring a tax pro) and signing up for direct deposit when you file.

It’s also wise to keep track of your refund on the IRS site and reach out to the agency if you haven’t received your refund within three weeks.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy 3.30% APY on SoFi Checking and Savings with eligible direct deposit.

FAQ

How can I receive my tax refund sooner?

To receive your tax refund as soon as possible (which typically means within three weeks of filing), file electronically and request that the refund be paid by direct deposit.

Is direct deposit faster than mail for tax refunds?

Direct deposit will typically save time versus a check sent by mail in terms of tax refunds. If you file your return electronically too, you’ll likely have the shortest possible time from finishing your return to receiving funds that are due to you.

When should you start planning to file your tax return?

Tax season begins in January, with the forms you need having to be sent by January 31. It’s wise to start getting organized as soon as possible in the New Year to get your return done. If you work with a professional tax preparer, you might want to book them even earlier since January through April will be their busy season.

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Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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MAGI, or modified adjusted gross income, is your adjusted gross income, plus certain deductions added back in. Adjusted gross income, or AGI, is your total income, minus any deductions you’re eligible to claim.

Knowing how to calculate MAGI can help you determine which tax deductions or credits you may be eligible for when it’s time to file your return. Here’s a breakdown of what MAGI is, and why it matters.

What Is MAGI?

MAGI is a tax term that refers to modified adjusted gross income. Gross income is your income before taxes or other deductions are applied. Understanding your MAGI can be helpful for tax planning, whether you’re making money trading stocks, or simply working a single job and earning a paycheck.

Definition of MAGI

In simple terms, MAGI is your adjusted gross income with some deductions added back in to see if you qualify for specific deductions or income-based programs.

Some groups may define MAGI slightly differently depending on how it’s used. For instance, in context of student loan interest deductions, the Internal Revenue Service (IRS) notes the following:

For most taxpayers, MAGI is the adjusted gross income (AGI) as calculated on their federal income tax return before subtracting any deduction for student loan interest.

The Social Security Administration (SSA), meanwhile, uses this definition:

Modified Adjusted Gross Income (MAGI) is the sum of the beneficiary’s adjusted gross income (AGI) (found on line 11 of the Internal Revenue Service (IRS) tax filing form 1040), plus tax-exempt interest income (line 2a of IRS Form 1040).

You may wonder why you’re subtracting certain deductions and then adding them back in, but the totals of your MAGI and AGI may differ. We’ll compare MAGI and AGI a little further on to help you understand the difference.

Recommended: What Is Income Tax?

Why MAGI Is Important

MAGI becomes important when determining which, if any, tax breaks you may be eligible to claim. It’s helpful to know your MAGI if you plan to:

•   Make traditional IRA contributions that you plan to deduct on your taxes.

•   Claim a premium tax credit for health insurance expenses.

•   Claim child tax credits or education credits, which reduce your tax liability dollar for dollar.

It can also be helpful if you plan to contribute to a Roth IRA, which requires you to be income-eligible. An IRA is a tax-advantaged account that you can use to save for retirement. Traditional IRAs allow for deductible contributions while Roth IRAs offer tax-free qualified withdrawals.

Apart from tax planning, your MAGI is used for Medicare planning to determine what you’ll pay for monthly premiums once you turn 65.

MAGI vs. Adjusted Gross Income (AGI)

MAGI and AGI are two different calculations, though the final numbers may be very close. Here’s how the IRS defines AGI:

Adjusted gross income, also known as (AGI), is defined as total income minus deductions, or “adjustments” to income that you are eligible to take.

Gross income, for AGI purposes, includes wages, dividends, capital gains, business and retirement income, tips, rents, and interest. Adjustments to income are deductions that reduce your gross income.

Some common deductions that reduce gross income to determine AGI include:

•   Health insurance premiums (if self-employed)

•   One half of self-employment taxes paid

•   Student loan interest

•   Educator expenses

•   Traditional IRA contributions and other qualified retirement plans

Your MAGI is your AGI, with some deductions added back in. Certain deductions are subject to limits, meaning that if your MAGI is too high, your deduction may be reduced or phased out entirely.

Who Needs to Calculate MAGI

Anyone who’s interested in claiming every tax credit or deduction they’re eligible for, up to the full amount allowed by the IRS, may benefit from knowing how to calculate MAGI.

Estimating your tax liability before the year ends gives you time to make some last-minute financial moves that might reduce what you owe or increase your refund. For instance, say you’ve been thinking of opening a Roth IRA. You’ll first need to know your MAGI to know if you’re eligible to contribute to a Roth, based on your income.

It’s also helpful to know your MAGI when applying for federal benefit programs. Your MAGI can affect your eligibility for:

•   Supplemental Nutrition Assistance Program (SNAP) benefits

•   Medicaid

•   Children’s Health Insurance Program (CHIP) benefits

How to Calculate MAGI

Tax planning software programs can calculate your MAGI automatically, or you consult with a tax professional. You’ll need a few pieces of information to find your MAGI.

Step 1: Calculate Your Adjusted Gross Income (AGI)

You’ll first need to find your AGI. To do that you first add up your total gross income. Again, this is all of your income from all sources, before taxes and deductions. Everyone’s list may be different, but might include:

•   Full or part-time employment wages

•   Self-employment income

•   Investments, including rental income

•   Interest and dividends

•   Capital gains

You’ll use your gross income number to find your AGI in the next step.

Step 2: Add or Subtract Applicable Adjustments

Now you’ll subtract applicable adjustments to gross income to find your AGI. Again, this will differ from individual to individual, but some of the most common adjustments for AGI include:

•   Traditional IRA contributions, including SEP IRA contributions if you’re self-employed

•   Student loan interest

•   Half of self-employment taxes paid

•   Tuition and fees

•   Contributions to a Health Savings Account (HSA)

The final number, after adjustments, is your AGI.

Step 3: Determine Your MAGI

Using your AGI you’ll now add back applicable adjustments to get your MAGI. Some of the things you’ll add back include:

•   Traditional IRA contributions, and SEP IRA contributions if you’re self-employed

•   Student loan interest

•   Half of self-employment taxes paid

•   Tuition and fees

•   Passive loss or passive income

•   Rental losses

•   Non-taxable Social Security payments

•   Foreign earned income exclusion

The resulting number is your MAGI, and this is what will help you discern which deductions or credits you might be eligible to take when filing your tax return.

Common Adjustments to AGI for MAGI Calculation

Some adjustments to AGI for MAGI calculations are more common than others. Here are some of the most-often used adjustments.

Tax-Exempt Interest Income

Tax-exempt interest income is not subject to tax at the federal level — as the name implies. This income may, however, still be subject to income tax at the state and local levels.

An example of tax-exempt interest income is income earned from municipal bonds. A municipal bond is a debt instrument that city and local governments use to raise money to fund public works.

When you buy a municipal bond or muni, the bond issuer agrees to pay you interest for a set term in exchange for the use of your money. If the bond is tax-exempt you won’t owe income tax on the interest earned.

But again, interest income from these bonds may still generate state or local tax liabilities.

Qualified Tuition Expenses

Qualified tuition expenses include tuition and required fees for enrollment or attendance at eligible postsecondary schools. The term “qualified tuition expenses” is most often used when discussing education tax credits, such as the American Opportunity Tax Credit (AOTC).

Qualified tuition expenses do not include:

•   Room and board

•   Transportation costs

•   Insurance and medical expenses

•   Student fees that are not required as a condition of enrollment or attendance

You can’t claim this credit for the same expenses that were paid for with tax-free scholarships or grants. Neither can you claim a deduction for the same education expenses that you claim a tax credit for.

IRA Contributions

Traditional IRAs allow you to deduct some or all of your contributions. The amount you can deduct is determined by three things:

•   Your MAGI

•   Your tax filing status

•   Whether you (and your spouse, if married) are covered by a retirement plan at your job

Note: If you or your spouse (if you’re married) are not covered by a retirement plan at work, your IRA contributions are fully deductible.

If either you or your spouse are covered by a workplace retirement plan, your IRA deduction may be limited. To determine how much of your IRA contributions you can deduct in a given year, if any, you’ll need to calculate your MAGI by adding certain deductions back to your AGI — such as the IRA contributions you deducted.

Deducting SEP or SIMPLE IRA Contributions

Keep in mind that contributions to self-employed retirement plans, such as SEP or SIMPLE IRAs, are generally subject to the same tax treatment as traditional IRAs. But because these accounts are used by small business owners and those who are self-employed, the rules governing deductions can be different from traditional IRAs, so it’s wise to check.

Roth IRAs do not allow for deductible contributions.

Student Loan Interest Deduction

The student loan interest deduction allows you to subtract amounts paid for student loan interest from your taxable income. For 2025 and 2026, you can deduct the lesser of $2,500 or the amount of interest you paid during the year.

The student loan interest deduction allows you to subtract amounts paid for student loan interest from your taxable income. For 2024 and 2025, you can deduct the lesser of $2,500 or the amount of interest you paid during the year.

Your MAGI must be below a certain amount to claim this deduction. For 2025, your ability to claim the deduction begins to phase out at these levels:

•   Single filers with a MAGI of $85,000 or more

•   Married couples filing jointly with a MAGI of $170,000

Single filers with a MAGI exceeding $100,000 and married couples with a MAGI greater than $200,000 won’t be able to deduct student loan interest.

For 2026, your ability to claim the deduction begins to phase out at these levels:

•   Single filers with a MAGI of $85,000 or more

•   Married couples filing jointly with a MAGI of $175,000

Single filers with a MAGI exceeding $100,000 and married couples with a MAGI greater than $205,000 won’t be able to deduct student loan interest.

MAGI and Tax Credits

Tax credits reduce your tax liability dollar for dollar. Some tax credits are refundable, meaning you can get a credit for them even if you don’t owe any tax.

MAGI is used to determine eligibility for a number of tax credits, including:

•   Child Tax Credit

•   Earned Income Tax Credit (EITC)

•   Premium tax credit for health insurance

•   Dependent Care Credit

Claiming credits can reduce your tax liability at the end of the year.

MAGI and Deductions

Tax deductions reduce your taxable income, which can push you into a lower tax bracket. As mentioned above, MAGI is used for several key deductions, including:

•   IRA contributions

•   Student loan interest

•   Educator expenses

•   Deductions for adoption expenses

You can claim both tax credits and deductions on your return to try and minimize your tax liability, or boost your refund. However, you can’t claim tax credits and deductions for the same expenses.

The Takeaway

MAGI is the same as AGI plus some adjustments added back into the mix. Navigating tax terms can seem daunting but it’s helpful to understand what MAGI is and how it can impact your financial situation. Learning about how taxes work can help you develop a plan for potentially minimizing your tax liabilities, so that you might have more money to invest.

Prepare for your retirement with an individual retirement account (IRA). It’s easy to get started when you open a traditional or Roth IRA with SoFi. Whether you prefer a hands-on self-directed IRA or an automated robo IRA, you can build a portfolio to help support your long-term goals while gaining access to tax-advantaged savings strategies.

FAQ

What is the difference between MAGI and AGI?

Your MAGI is your adjusted gross income, with certain adjustments added back in. Your AGI is your gross income, after certain deductions are taken out.

Is MAGI used for all tax calculations?

MAGI is used for certain tax calculations that determine eligibility for tax breaks. For example, if you’re wondering whether you can claim the Earned Income Tax Credit, or get a deduction for traditional IRA contributions, your MAGI makes a difference.

Can MAGI be higher or lower than AGI?

Your MAGI will always be equal to your AGI, or higher. MAGI is your AGI, with certain deductions or adjustments added back in.

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About the author

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Photo credit: iStock/NIKOLA ILIC PR AGENCIJA ZA DIZAJN STUDIOTRIPOD SURCIN

SoFi Invest is a trade name used by SoFi Wealth LLC and SoFi Securities LLC offering investment products and services. Robo investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser. Brokerage and self-directed investing products offered through SoFi Securities LLC, Member FINRA/SIPC.

For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.


¹Probability of Member receiving $1,000 is a probability of 0.026%; If you don’t make a selection in 45 days, you’ll no longer qualify for the promo. Customer must fund their account with a minimum of $50.00 to qualify. Probability percentage is subject to decrease. See full terms and conditions.

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