1. What is Adjusted Gross Income (AGI)?

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 Is AGI Calculated?

The calculator uses the AGI formula:

Where:

• Gross Income — All income you receive in the form of money, goods, property, and services
• Adjustments — Specific deductions allowed by the IRS (e.g., educator expenses, student loan interest, IRA contributions)

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

3. Importance of AGI

Details: Your AGI affects your taxable income, determines eligibility for tax credits and deductions, and may be used by financial institutions when evaluating loan applications.

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 the difference between gross income and AGI?
A: Gross income is your total income before any deductions. AGI is gross income minus specific adjustments allowed by the IRS.

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 taxes.

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

Q4: Where can I find my AGI from last year?
A: Your AGI from the previous year appears on Line 11 of Form 1040 from your most recent tax return.

Q5: Does AGI include standard or itemized deductions?
A: No, AGI is calculated before standard or itemized deductions and personal exemptions are subtracted.