What is Adjusted Gross Income? And what are the ways to control it?
Notre Retirement Daily’s Robert Powell sat down with Jeffrey Levine, CPA and tax expert at Buckingham Strategic Wealth Partners, to answer these questions and more.
Watch the video interview above or read the video transcript below.
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Video Transcript | Jeffrey Levine, CPA and tax specialist, Buckingham Strategic Wealth
Robert Powell: What is Adjusted Gross Income and how do I check it? Well here to tell me about it is Jeffrey Levine from Buckingham. Jeffrey, welcome.
Jeffrey Levin: It’s good to be with you, Bob. So adjusted gross income. What I like to think is that adjusted gross income is part time on your tax return. It’s basically part of the way through the bend, half way through. We took some deductions, but not all of the deductions. Specifically, we actually start with, what is your income from all there is? And we put it in a big funnel at the top. Then we take out what’s called your above the line deductions, or sometimes you’ll hear it called the deductions to get to AGI. And indeed, these are the types of deductions you can claim, whether you itemize your return or take the standard deduction. This includes things like IRA deductions, self-employed health insurance, self-employed pension plans, and the types of deductions available, whether you detail them or not.
Recommended reading: How to find your Adjusted Gross Income (AGI) to file your tax return online
There would also be interest deductions on student loans, educator expenses, etc. So these deductions can help you reduce your income and then arrive at the AGI, which is not the amount of income you are taxed on, but an amount of income that is used to effectively determine the number of credits or additional deductions to which you are generally entitled. Again, it’s not the amount you pay tax on, but it’s an important number itself that halftime score, if you will because that AGI number determines whether you’re eligible or no to a host of other tax advantages.
Editor’s Note: Content has been reviewed for tax accuracy by a TurboTax CPA expert.
Zach Faulds contributed to this article and produced the associated video and/or graphics.
