Q&A: What is Adjusted Gross Income (AGI)?

Adjusted Gross Income (AGI) is a tax term that refers to someone’s total income while taking into consideration important adjustments. Taxable income is calculated by subtracting the standard deduction or itemized deductions from AGI. The adjustments that convert gross income into AGI include:

  • Certain retirement plan contributions, such as individual retirement accounts (IRA), SIMPLE IRA, SEP-IRA, and qualified plans
  • Half of the self-employment tax
  • Healthcare savings account (HSA) deductions
  • Alimony paid (included in the recipient’s gross income)
  • Moving expenses (but since 2018, only if you’re active-duty military moving due to military orders)
  • Losses incurred from the sale or exchange of property
  • Early-withdrawal penalties levied by financial institutions
  • School tuition, fees, and student loan interest (exceptions and limits usually apply)
  • Jury duty pay turned over to a filer’s employer
  • Some business-related expenses incurred by performing artists, teachers, fee-basis government officials, and reservists

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