Your adjusted gross income (AGI) is the total amount of income and earnings you earned during the tax year minus certain income adjustments. It is the starting point for calculating your taxes and determining your eligibility for certain tax credits and deductions. AGI is calculated by subtracting specific deductions from your total gross income. This includes 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. Your total income is your gross income from all sources except certain deductions, such as expenses, allowances, and reliefs. This includes salaries, dividends, capital gains, business income, retirement distributions, and other income. 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. It's important to note that when calculating your total income, if you earn income from deposit interest or dividends, you must use the gross figures. To sum up, your adjusted gross income (AGI) is an important factor when filing your taxes. It's calculated by subtracting specific deductions from your total gross income and includes items such as educator expenses, interest on student loans, alimony payments, or contributions to a retirement account.
Your total income is also important to consider when filing taxes as it includes salaries, dividends, capital gains, business income, retirement distributions, and other income. If the total income you receive is lower than the exemption limit, you won't pay any income tax (IT).
