Adjusted Gross Income (AGI)
Adjusted Gross Income is your total gross income reduced by specific above-the-line deductions, used as the starting point for calculating your federal taxable income.
Detailed Explanation
AGI is reported on Form 1040 and equals total income (wages, interest, dividends, capital gains, business income, retirement distributions) minus adjustments such as student loan interest, traditional IRA contributions, and self-employed health insurance. AGI determines eligibility for many credits and deductions, including the Child Tax Credit, education credits, and IRA contribution limits. Modified Adjusted Gross Income (MAGI) adds certain items back to AGI for specific tax calculations.
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Learn about Individual Tax PreparationRelated Terms
Form 1040 (US Individual Income Tax Return)
The annual federal income tax return filed by US citizens and resident aliens to report income, deductions, credits, and tax liability.
Standard Deduction
A fixed dollar amount that reduces taxable income, available to taxpayers who do not itemize deductions on Schedule A.
Tax Bracket
A range of taxable income subject to a specific marginal tax rate under the federal progressive income tax system.
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