1. What is an AGI Calculator?

Definition: This calculator estimates your Adjusted Gross Income (AGI) by subtracting allowable adjustments from your gross income.

Purpose: AGI is a key figure in tax calculations that determines eligibility for certain tax deductions and credits.

2. How Does the AGI Calculator Work?

The calculator uses the formula:

Where:

• \( AGI \) — Adjusted Gross Income (USD)
• \( Gross\ Income \) — Total income before any deductions (USD)
• \( Adjustments \) — Allowable deductions (USD)

Explanation: Gross income includes wages, dividends, capital gains, business income, retirement distributions, and other income. Adjustments might include educator expenses, student loan interest, alimony payments, or contributions to retirement accounts.

3. Importance of AGI Calculation

Details: AGI is used to determine your taxable income and eligibility for many tax benefits. It affects deductions, credits, and contribution limits for retirement accounts.

4. Using the AGI Calculator

Tips: Enter your total gross income and the sum of all allowable adjustments. Both values must be ≥ 0.

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. AGI is gross income minus specific adjustments allowed by the IRS.

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

Q3: Is AGI the same as taxable income?
A: No, taxable income is calculated by subtracting either the standard deduction or itemized deductions from your AGI.

Q4: Where can I find my AGI on my tax return?
A: For Form 1040, your AGI appears on line 11 (for 2022 returns). It's labeled "Adjusted Gross Income."

Q5: Why is AGI important for tax filing?
A: AGI determines eligibility for many tax credits and deductions, affects IRA contribution limits, and is used to calculate taxable income.