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Alexandra Sabalier
November 01, 2021
1 min

What is Adjusted Gross Income

What is the Adjusted Gross Income (AGI)

Adjusted Gross Income is the amount that is used to calculate taxable income. For most individual tax purposes, AGI is more relevant than gross income. For US tax purposes, the Adjusted Gross Income is your total gross income minus specific deductions.

This is how you calculate your Adjusted Gross Income:

Tally up all your sources of income to calculate your gross income. After you've tallied up all your sources of income to find your gross income, calculate your expenses and deductions that can reduce your tax burden. Your gross income can be reduced by:

  • Certain business expenses such as materials, gas mileage, or equipment rental fees
  • Educator expenses
  • Penalties from financial institutions for early withdrawal of savings
  • Alimony paid
  • Student loan interest (with some qualifications)- Married tax-filers who are not
  • Deduction for half the self-employment tax
  • Contributions to certain retirement accounts
  • Health savings account (HSA) deductions
  • Jury duty pay sent directly to the juror's employer
  • SEP-IRA, SIMPLE IRA and 401(k) deductions for the self-employed

Your income after these adjustments to income is your adjusted gross income (AGI), which serves as the basis for your income taxes.

I am here for you

If you need to calculate your AGI to properly file your U.S. tax return and get organized during the year so that you can claim the foreign earned income exclusion, as well as all the other deductions, exclusions and credits you are entitled to, we can do it right away. If you have further questions, or need more guidance on planning your tax strategy, let's talk. I'm always happy to provide detailed, personalized guidance through a 1:1 consultation. You can reserve the best day and time to meet by contacting me to schedule your consultation.

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