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 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
• Adjustments - Certain deductions like student loan interest, IRA contributions, and educator expenses

3. Importance of AGI

Details: Your AGI affects your tax bracket, eligibility for tax credits and deductions, and is used as the basis for calculating your taxable income.

4. Using the Calculator

Tips: Enter your total gross income and all applicable 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 your income before any deductions. AGI is gross income minus specific adjustments.

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

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

Q4: Where can I find my AGI on my tax return?
A: For Form 1040, your AGI appears on line 11 (for 2022 returns).

Q5: Can AGI be higher than gross income?
A: No, AGI is always equal to or less than gross income since adjustments are subtracted.