On your federal tax return, your AGI is on line 11 of your Form Your AGI is often the starting point for calculating your tax bill. AGI is the basis on which you might qualify for many deductions and credits.
For example, you may be able to deduct unreimbursed medical expenses , but only when they're more than 7. So the lower your AGI, the greater the deduction. Your state tax return might also use your federal AGI as a starting point. If you file taxes online , your software will calculate your AGI. According to the IRS, for most taxpayers, modified adjusted gross income, or MAGI, is simply adjusted gross income before subtracting deductible student loan interest.
It can also be a baseline for determining the phaseout level of some credits and tax-saving strategies, and sometimes the formula for MAGI can depend on the type of tax benefit it applies to. What is adjusted gross income AGI? How is adjusted gross income AGI calculated? Social Security. Real estate. And then subtract:. Educator expenses. How to Calculate Interest Rates. Megan Doyle is a business technology writer and researcher whose work focuses on financial services and cross-cultural diversity and inclusion.
All Credit Intel content is written by freelance authors and commissioned and paid for by American Express. The material made available for you on this website, Credit Intel , is for informational purposes only and is not intended to provide legal, tax or financial advice.
If you have questions, please consult your own professional legal, tax and financial advisors. Money Cards Credit Score Glossary. Facebook Twitter Linkedin Email. What Is Adjusted Gross Income? Adjusted gross income is simply all the money you made for a year minus special adjustments the IRS allows to help lower taxes.
For the tax year, it appears on line 9 of your tax return, aka Your total adjustments to income appear on line 10c of your Taxable income: Your AGI is then used to calculate your taxable income, or the portion of your income that will be taxed. Your taxable income is shown on line 15 of your There are several important ways your AGI is used: Determining your federal and state tax liability. Your AGI is part of the equation to calculate your taxable income and your federal tax liability.
If you live in a state that requires you pay state income taxes, your AGI will be used to determine your state taxes, too. Neither Protective Life nor its representatives offer legal or tax advice.
We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax-related decisions. For information about Protective Life and its products and services, visit www.
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Knowing what you earn before taxes and deductions is an important figure to be familiar with, but it is also important to know what that number is after taxes and deductions. What is annual gross income? What is adjusted gross income?
Getting help from a financial professional As you consider your gross income vs your adjusted gross income, it's important to fully understand the two in context of your personal budget and greater financial goals. Financial management Teaching kids how to budget Learn more. Credit union or bank: What's the difference?
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