1. What is Adjusted Gross Income (AGI)?

Adjusted Gross Income (AGI) is your total gross income minus specific IRS adjustments. It's a key figure used to determine your taxable income and eligibility for certain tax credits and deductions.

2. How AGI is Calculated

The calculator uses the standard AGI formula:

Where:

• Gross Income — All income from all sources before any deductions
• IRS Adjustments — Specific deductions allowed by the IRS (also called "above-the-line" deductions)

Explanation: AGI serves as the foundation for calculating your taxable income after you take either the standard deduction or itemized deductions.

3. Importance of AGI

Details: Your AGI affects your tax bracket, eligibility for tax credits (like education credits), and deductions (like IRA contributions). Many states also use federal AGI as a starting point for state tax calculations.

4. Using the Calculator

Tips: Enter your total gross income and IRS adjustments in dollars. Both values must be positive numbers. The calculator will compute your AGI.

5. Frequently Asked Questions (FAQ)

Q1: What's included in gross income?
A: Wages, dividends, capital gains, business income, retirement distributions, and other income.

Q2: What are common IRS adjustments?
A: Educator expenses, student loan interest, alimony payments (for certain years), self-employment tax, and contributions to traditional IRAs.

Q3: Is AGI the same as taxable income?
A: No, AGI comes before subtracting standard/itemized deductions and qualified business income deduction.

Q4: Where can I find my AGI from last year?
A: Look at line 11 of your Form 1040 from the previous tax year.

Q5: Why is AGI important beyond taxes?
A: Lenders, financial aid programs, and other institutions often use AGI to evaluate financial status.