WITH so many different deductions and incomes on tax forms, filing your taxes can quickly become confusing.
To help you, we explain what Adjusted Gross Income (AGI) is and how to check yours.
What is AGI?
AGI is simply your total gross income (pre-tax earnings or other deductions) minus specific deductions.
In addition, your AGI is the starting point for calculating your taxes.
Your AGI impacts many deductions and tax credits you can take at tax time.
This is important because deductions and credits can increase your tax refund or reduce the amount of tax you owe.
Depending on your deposit status, you may be subject to an AGI limit. However, this limit generally applies to people with high incomes.
Generally, the more deductions and credits you take, the lower your taxable income.
How to check your AGI
The first step in calculating your AGI is to determine your total gross income for the year.
Your gross income includes your salary and any income from self-employment businesses, investment dividends, retirement income, and things of a similar nature.
To arrive at your final AGI, you will subtract certain amounts from your total income.
For example, teachers can deduct unreimbursed class fees, self-employed people can deduct insurance premiums, and everyone can deduct charitable donations.
An income calculator can be helpful during this process, and you can find one on TaxAct or TurboTax.
The Sun also explains when tax refunds will come out in 2022 and five ways to boost your tax refund.
Plus, we show you some great methods that can help clear your debt.
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