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 Does the Calculator Work?

The calculator uses the AGI formula:

Where:

• Gross Income — Total income before any deductions
• Adjustments — Specific deductions allowed by tax law (e.g., educator expenses, student loan interest)

Explanation: The equation calculates your AGI by subtracting allowable adjustments from your total gross income.

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 aid applications.

4. Using the Calculator

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

Q2: What are common adjustments to income?
A: Common adjustments include educator expenses, student loan interest, alimony payments (for certain years), and contributions to traditional IRAs.

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

Q4: Does AGI include standard deduction?
A: No, the standard deduction is subtracted from AGI to arrive at taxable income.

Q5: How often should I calculate my AGI?
A: You should calculate your AGI when preparing your annual tax return and when making significant financial decisions.