Video: Adjusted Gross Income (AGI) Explained - TurboTax

Mar 5, 2024 · The IRS uses your AGI to determine whether you can claim certain deductions and credits and the amounts you're eligible for. For more information to help you better understand Adjusted Gross Income, also known as AGI, watch this TurboTax tax tip video.

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What is adjusted gross income (AGI)?

AGI is a key metric that’s used by the IRS and some lenders. Knowing your AGI helps you figure out how much you owe in taxes and which tax credits you qualify for. Want to learn more about your AGI, how it impacts you, and how to calculate adjusted gross income? Follow along as we break down all the details. ...

What is AGI & how do I calculate it?

Calculating your AGI helps you understand how much you have to pay in taxes. Once you figure out your AGI, you can subtract the standard or itemized deductions to find your taxable income and calculate your tax bill. Your AGI is also used to determine your eligibility for tax credits, such as the Earned Income Tax Credit. ...

What is AGI & how does it affect my tax credit?

Your AGI is also used to determine your eligibility for tax credits, such as the Earned Income Tax Credit. If your AGI exceeds a certain amount, your tax credit may be reduced or you might not be eligible at all. There’s also your modified adjusted gross income (MAGI), which is your AGI plus a few additional deductions. ...

What is AGI & how does it work?

So those deductions can help you lower your income and then arrive at AGI, which is not the amount of income that you're taxed on but is an income amount that is used to effectively determine how many credits or deductions beyond that you're generally entitled to. ...

What is modified adjusted gross income (MAGI)?

There’s also your modified adjusted gross income (MAGI), which is your AGI plus a few additional deductions. Depending on the tax deduction or credit you’re applying for, you may need to calculate your MAGI. Now that you have a general understanding of AGI and what it’s used for, let’s go through the calculation step-by-step. ...

What happens if my AGI exceeds a certain amount?

If your AGI exceeds a certain amount, your tax credit may be reduced or you might not be eligible at all. There’s also your modified adjusted gross income (MAGI), which is your AGI plus a few additional deductions. Depending on the tax deduction or credit you’re applying for, you may need to calculate your MAGI. ...