1. What is Adjusted Gross Income (AGI)?

Adjusted Gross Income (AGI) is your total gross income minus specific adjustments. It's an important number used to determine your taxable income and eligibility for certain tax credits and deductions.

2. How is AGI Calculated?

The calculator uses the basic AGI formula:

Where:

• \( Gross Income \) — All income from all sources before any deductions
• \( Adjustments \) — Specific deductions allowed by the IRS (2021 values)

Explanation: The equation accounts for all taxable income minus allowable adjustments to arrive at your AGI.

3. Importance of AGI

Details: AGI is used to determine your taxable income, eligibility for certain tax credits, and can affect your ability to contribute to retirement accounts. It's also often requested when applying for loans or financial aid.

4. Using the Calculator

Tips: Enter your total gross income and all applicable adjustments for 2021. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's included in gross income?
A: Wages, salaries, tips, interest, dividends, capital gains, business income, retirement distributions, and other income.

Q2: What are common adjustments for 2021?
A: Educator expenses, student loan interest, IRA contributions, self-employment tax, and more.

Q3: Is AGI the same as taxable income?
A: No, AGI is before standard/itemized deductions and qualified business income deduction.

Q4: Where can I find my AGI on my tax return?
A: For 2021 returns, it's line 11 on Form 1040.

Q5: Why is the 2021 calculator different?
A: Tax laws change annually, so adjustment amounts and qualifications may differ by year.