1. What is Adjusted Gross Income (AGI)?

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 Does the Calculator Work?

The calculator uses the AGI formula:

Where:

• Taxable Income — Income subject to taxation
• Below-the-Line — Deductions taken after AGI is calculated
• Adjustments — Specific deductions allowed by the IRS

3. Importance of AGI Calculation

Details: AGI is crucial for determining your tax bracket, eligibility for tax credits and deductions, and is often used by financial institutions when evaluating loan applications.

4. Using the Calculator

Tips: Enter all amounts in USD. Taxable income should include wages, interest, dividends, capital gains, etc. Below-the-line includes itemized or standard deductions. Adjustments include items like student loan interest or IRA contributions.

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.

Q2: How does AGI affect my taxes?
A: AGI determines your eligibility for many tax credits and deductions, and is the starting point for calculating your taxable income.

Q3: What are common adjustments to income?
A: Common adjustments include educator expenses, student loan interest, IRA contributions, and self-employment taxes.

Q4: Does AGI include standard deduction?
A: No, the standard deduction is a below-the-line deduction applied after calculating AGI.

Q5: How can I lower my AGI?
A: You can lower AGI by maximizing adjustments like retirement contributions, health savings accounts, and eligible business expenses.