Your adjusted gross income (AGI) consists of the total amount of income and earnings you earned during the tax year minus certain income adjustments. It is found on different lines in forms from previous years. Adjusted gross income (AGI) is defined as gross income minus income adjustments. Gross income includes your salaries, dividends, capital gains, business income, retirement distributions, and other income.
Income adjustments include items such as educator expenses, interest on student loans, alimony payments, or contributions to a retirement account. Your AGI will never be higher than your total gross income at the time you file and, in some cases, it may be lower. See instructions 1040 (PDF of the calendar) for more information. Adjusted gross income is simply your total gross income minus specific deductions.
In addition, your adjusted gross income is the starting point for calculating your taxes and determining your eligibility for certain tax credits and deductions that you can use to lower your overall tax bill. Your total income is your gross income from all sources except certain deductions, such as expenses, allowances, and reliefs. If the total income you receive is lower than the exemption limit, you won't pay any income tax (IT). If you are married or part of a civil union and are evaluated together, the income of your spouse or domestic partner is included in the total income.
Start with your household's adjusted gross income (AGI), your total (or “gross) income for the tax year, minus certain adjustments you can make. If you earn income from deposit interest or dividends, you must use the gross figures when calculating your total income.
