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 serves as the basis for many tax calculations and determines eligibility for certain tax credits and deductions.

2. How AGI is Calculated

The basic formula for AGI is:

Where:

• Gross Income — All income you receive in the form of money, goods, property, and services that isn't exempt from tax
• Adjustments — Specific deductions allowed by the IRS to reduce your gross income (e.g., student loan interest, IRA contributions, educator expenses)

Note: AGI is calculated before taking either the standard deduction or itemized deductions.

3. Importance of AGI

Details: Your AGI affects:

• Your taxable income amount
• Eligibility for certain tax credits and deductions
• Ability to contribute to Roth IRAs
• Calculation of Social Security taxes if you're self-employed
• Many state tax calculations

4. Using the Calculator

Instructions:

1. Enter your total gross income (all taxable income before any deductions)
2. Enter the total of your adjustments to income (IRS-approved above-the-line deductions)
3. Click "Calculate" to see your AGI

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between AGI and taxable income?
A: AGI is calculated before standard or itemized deductions and personal exemptions. Taxable income is AGI minus these deductions.

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

Q3: Is AGI the same as modified adjusted gross income (MAGI)?
A: No, MAGI typically adds back certain items to AGI and is used for specific tax provisions like IRA contribution limits.

Q4: Where can I find my AGI from last year?
A: Your AGI appears on line 11 of Form 1040 (2022 tax year) or line 8b of the 1040 form for 2021.

Q5: Why is my AGI important for filing taxes?
A: The IRS uses your prior-year AGI to verify your identity when e-filing, and it affects many tax calculations for your current return.