The AGI calculation is relatively straightforward. However, your AGI is also worthy of your attention, since it can directly impact the deductions and credits you’re eligible for-which can wind up reducing the amount of taxable income you report on the return. When preparing your tax return, you probably pay more attention to your taxable income than your adjusted gross income (AGI). If your state has an income tax, your AGI can affect those taxes, too, since many states use your federal AGI as the starting point for calculating your state taxable income.Income adjustments can include contributions to eligible retirement accounts, student loan interest you paid, alimony payments to a former spouse (for agreements prior to 2019), self-employed health insurance premiums, and half of the self-employment taxes you pay.Your adjusted gross income (AGI) is equal to the total income you report minus specific deductions, or adjustments, that you’re eligible to take.
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