What is AGI (adjusted gross income)?
Adjusted gross income (AGI) is the amount of money you made that winds up getting taxed. For example, maybe you earned $35,000 last year, but your AGI might only be $29,000, which means you’ll only have to pay taxes on that $29,000, not your original $35,000 in wages that you worked for. Now, what determines the AGI amount? Deductions. The amount you’d get taxed on depends on deductions that you qualify for such as student loan interest, medical expenses, charitable contributions, and other types of deductions.
Your AGI is calculated by subtracting certain deductions from your total income. Your total income includes items such as wages, tips, interest and unemployment compensation.