1. What is Adjusted Gross Income (AGI)?

Adjusted Gross Income (AGI) is your total gross income minus specific adjustments. It appears on Line 11 of IRS Form 1040 and is used to determine taxable income and eligibility for certain tax credits and deductions.

2. How Does the Calculator Work?

The calculator uses the standard AGI formula:

Where:

• Total Income — Includes wages, dividends, capital gains, business income, retirement distributions, and other income
• Adjustments to Income — Includes educator expenses, student loan interest, alimony payments, and contributions to retirement accounts

3. Importance of AGI Calculation

Details: AGI is used to determine your taxable income, qualify for tax deductions and credits, and is often requested on financial applications. Many tax benefits phase out at certain AGI levels.

4. Using the Calculator

Tips: Enter your total income and adjustments in USD. The calculator will compute your AGI, which corresponds to Line 11 on IRS Form 1040.

5. Frequently Asked Questions (FAQ)

Q1: Where can I find my AGI on my tax return?
A: AGI appears on Line 11 of IRS Form 1040 (for tax years 2020 and later; was Line 8b on 2019 returns).

Q2: What's the difference between AGI and taxable income?
A: Taxable income is your AGI minus either the standard deduction or itemized deductions, and qualified business income deduction if applicable.

Q3: Why is AGI important for tax credits?
A: Many tax credits like the Earned Income Tax Credit (EITC) and American Opportunity Credit have AGI limits for eligibility.

Q4: Can AGI be higher than gross income?
A: No, AGI is always equal to or less than gross income since it's gross income minus adjustments.

Q5: How can I lower my AGI?
A: You can reduce AGI by maximizing adjustments like retirement account contributions, student loan interest payments, and educator expenses.