{"id":353981,"date":"2022-08-19T07:44:43","date_gmt":"2022-08-19T12:44:43","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/tax\/federal-taxes\/what-is-adjusted-gross-income.html"},"modified":"2023-11-13T11:25:45","modified_gmt":"2023-11-13T16:25:45","slug":"what-is-adjusted-gross-income","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/tax\/federal-taxes\/what-is-adjusted-gross-income.html","title":{"rendered":"What Is Adjusted Gross Income?"},"content":{"rendered":"\n
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What Is Adjusted Gross Income?<\/h1>\n\n
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\n By FindLaw Staff<\/a> | Legally reviewed by J.P. Finet, J.D.<\/a>\n | Last updated\n
\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n\n\n

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U.S. taxpayers must report all the income they earn each year to the Internal Revenue Service (IRS), but you are not taxed on all your income. <\/p>\n\n <\/div>\n\n\n\n

To calculate the amount of tax you owe, you must first calculate the amount of income subject to federal tax. It is a multi-step calculation that starts with determining your gross income and using that number to calculate your adjusted gross income (AGI). Your AGI is then how you find your taxable income.<\/p>\n

In addition to being an essential part of calculating your taxable income, AGI determines your eligibility for certain\u00a0tax credits<\/a>\u00a0and tax deductions that can reduce your tax bill. AGI also plays a role when you\u00a0e-file<\/a>\u00a0because the IRS requires you to verify your identity by submitting the AGI you reported on the previous year’s income tax return.<\/p>\n

The following sections will look at how your AGI is calculated and the impact it can have on your tax liability.<\/p>\n

Finding Your Gross Income<\/h2>\n

Before calculating your AGI, you first need to find your\u00a0gross income<\/a>. For tax purposes, an individual’s gross income is their total earnings before subtracting adjustments and deductions. Gross income includes more than just what you earn at your job or your business income. Gross income also includes such things as tips, pension payments, Social Security benefits, dividends,\u00a0capital gains<\/a>, and interest.<\/p>\n

Adjustments to Gross Income<\/h2>\n

As the name implies, AGI is gross income minus adjustments. While the IRS refers to these items as “adjustments,” they are often confused with tax deductions and operate in much the same way. For example, while it is an adjustment, most people refer to the “student loan interest deduction.” Other common adjustments include:<\/p>\n