What is Adjusted Gross Income? What is AGI?

Adjusted Gross Income is essentially taxable income reported on a tax return minus allowed adjustments.  Examples of adjustments can vary from year to year; however, common ones include alimony, traditional IRA deductions, moving expenses, and student loans.

Why is AGI Important?

The amount of AGI on a tax return can impact returns in both positive and negative ways depending on an individual’s situation.  It is also the amount that flows over to many state income tax returns as a starting point for determining taxable income.

Generally, the higher the AGI, the higher there is a likelihood of certain credits and deductions being limited (i.e., student loan deduction, child tax credit, etc.)  However, the reverse can be true as well.  The lower the AGI, there is a higher likelihood that certain credits and deductions may be claimed (i.e., medical expenses, Earned Income Credit, etc.).  The exact impact of AGI on a tax return will vary from person to person.

Simply Taxes, LLC is a local year-round tax preparation firm with an office located in North Raleigh.  Our Raleigh accountants are ready to assist you with your questions pertaining to your taxes!

Related Articles:

Which Medical Expenses Can Be Deducted On Tax Returns: Tax Deductible Medical Expenses

Standard Deductions vs. Itemized Deductions:  Which Deduction is Better for Tax Returns?

The information contained within this article is for general guidance only. As such, it should not be used as a substitute for consulting with professional accounting, tax, legal or other competent advisers. 

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