1. What is Adjusted Gross Income?

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 basic AGI calculation formula is:

Where:

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

3. Importance of AGI

Details: AGI is used to determine:

• Your taxable income after standard or itemized deductions
• Eligibility for many tax credits and deductions
• Your ability to contribute to certain retirement accounts
• Income-based repayment plans for student loans

4. Using the Calculator

Tips:

• Enter your total gross income from all sources
• Enter the sum of all your eligible adjustments
• Common adjustments include educator expenses, student loan interest, and contributions to traditional IRAs

5. Frequently Asked Questions (FAQ)

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

Q2: Where can I find my AGI on my tax return?
A: AGI appears on line 11 of Form 1040 (for 2022 tax year).

Q3: What are common adjustments to income?
A: Common adjustments include educator expenses, student loan interest, HSA contributions, and moving expenses for military.

Q4: Does AGI include standard deduction?
A: No, standard deduction is subtracted after calculating AGI to determine taxable income.

Q5: Why is AGI important for tax credits?
A: Many tax credits have AGI limits that phase out the credit as income increases.