1. What is Adjusted Gross Income (AGI)?

Adjusted Gross Income (AGI) is your total gross income minus specific 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 AGI calculation formula is:

Where:

• Gross Income — All income from all sources before any deductions
• Adjustments — Specific deductions like IRA contributions, student loan interest, educator expenses, etc.

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

3. Importance of AGI

Details: AGI is used to determine eligibility for tax credits, deductions, and various government programs. It affects how much you can contribute to retirement accounts and qualifies you for certain tax benefits.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

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

Q2: What are common adjustments to income?
A: Common adjustments include IRA contributions, student loan interest, educator expenses, and health savings account contributions.

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

Q4: How does AGI affect tax credits?
A: Many tax credits have AGI phase-out ranges where the credit amount decreases as AGI increases.

Q5: Where can I find my AGI on my tax return?
A: For Form 1040, AGI appears on line 11 (for 2022 returns) and is labeled "Adjusted Gross Income."