Adjusted gross income (AGI) is your total income from all sources, such as wages, dividends, alimony received, and benefits, minus eligible deductions and adjustments.
These adjustments may include contributions to retirement savings, health insurance premiums (in specific cases), alimony paid, and student loan interest. AGI is an important figure because it serves as the basis for calculating your taxable income and helps determine eligibility for various tax credits and deductions. It is calculated before applying the standard deduction or any detailed expense claims.
Understanding your AGI is key to accurate tax filing, as it affects how much tax you owe or the size of your refund.