"Adjusted Gross Income (AGI)"

What is Adjusted Gross Income ?

Adjusted Gross Income (AGI) is the total income that an individual reports on their tax return after subtracting certain deductions, also known as adjustments.

How Adjusted Gross Income Works ?

AGI is a modification of gross income as specified by the US tax code. The IRS utilizes your adjusted gross income amount to calculate your annual income tax liability. 

Types of AGI Deductions

Taxpayer can subtract certain deductions, including contributions to retirement accounts, student loan interest payments, and certain types of business expenses. Below are examples of deductions.


What Income Sources are Included in AGI ?

Total of annual earnings, which may include wages, dividends, capital gains, interest income, royalties, rental income, and retirement payouts is known as gross income. 

Uses of Adjusted Gross Income

AGI is used to determine eligibility for certain tax benefits, such as the Earned Income Tax Credit, to calculate the taxpayer's tax liability & calculating certain itemized deductions.

Who Need to Calculate Adjusted Gross Income ?

Individuals who are required to file an income tax return with the Internal Revenue Service (IRS) in the United States need to calculate their Adjusted Gross Income (AGI).


How to Calculate Adjusted Gross Income ?

AGI works by calculating the total income of an individual for tax purposes & then subtracting certain deductions to arrive at a lower taxable income.