1. What is Adjusted Gross Income?

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

2. How Does the Calculator Work?

The calculator uses the simple AGI formula:

Where:

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

Explanation: AGI serves as the foundation for calculating your taxable income and determining eligibility for many tax benefits.

3. Importance of AGI Calculation

Details: Your AGI affects your tax bracket, eligibility for tax credits and deductions, and is used as the basis for many financial calculations including student loan repayment plans and health insurance subsidies.

4. Using the Calculator

Tips: Enter your total gross income and all applicable adjustments in dollars. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

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

Q2: What are common adjustments to income?
A: Educator expenses, student loan interest, IRA contributions, moving expenses for military, and self-employment taxes.

Q3: How is AGI different from taxable income?
A: Taxable income is your AGI minus either the standard deduction or itemized deductions and any qualified business income deduction.

Q4: Why is AGI important for tax credits?
A: Many tax credits phase out at certain AGI levels, making it crucial for determining eligibility.

Q5: Where can I find my AGI on my tax return?
A: For Form 1040, it's line 11 (for 2022 returns) or line 8b (for 2021 returns).