1. What is Adjusted Gross Income (AGI)?

Adjusted Gross Income (AGI) is your total gross income minus specific adjustments. It's a key figure on your tax return that determines your eligibility for certain tax credits and deductions.

2. How AGI is Calculated

The basic formula for AGI is:

Where:

• Gross Income — Includes wages, dividends, capital gains, business income, retirement distributions, and other income
• Adjustments — May include educator expenses, student loan interest, alimony payments (for pre-2019 divorces), contributions to retirement accounts, and other eligible deductions

3. Importance of AGI

Details: Your AGI determines your eligibility for many tax benefits and is used to calculate your taxable income. Many states also use federal AGI as the starting point for state income tax calculations.

4. Using the Calculator

Tips: Enter your total gross income and all eligible adjustments for 2022. The calculator will compute your Adjusted Gross Income.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between gross income and AGI?
A: Gross income is your total income before any deductions. AGI is gross income minus specific adjustments.

Q2: What are common adjustments to income?
A: Common adjustments include educator expenses, student loan interest, IRA contributions, self-employment tax, and tuition/fees.

Q3: Why is AGI important for taxes?
A: AGI determines eligibility for tax credits/deductions and is the starting point for calculating taxable income.

Q4: Does AGI include standard or itemized deductions?
A: No, those are subtracted from AGI to arrive at taxable income.

Q5: How can I lower my AGI?
A: You can contribute to retirement accounts, health savings accounts, or take advantage of other eligible adjustments.