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In the United States income tax system, adjusted gross income (AGI) is an individual's total gross income minus specific deductions. [1] It is used to calculate taxable income, which is AGI minus allowances for personal exemptions and itemized deductions. For most individual tax purposes, AGI is more relevant than gross income.
Your W-2 does not list your adjusted gross income, but it contains the information you need to calculate your AGI. Box 1 lists your total income earned from your employer .
Net investment income tax (NIIT): The NIIT applies to certain types of investment income and is triggered when your AGI exceeds specific thresholds. It can result in an additional 3.8% tax on net ...
Some of the most common terms that pop up mainly in regard to taxes include gross income, adjusted gross income (AGI) and modified adjusted gross income (MAGI). The Economy and Your Money: All You ...
Allowable deductions include: Medical expenses, only to the extent that the expenses exceed 7.5% (as of the 2018 tax year, when this was reduced from 10%) of the taxpayer's adjusted gross income. [2] (For example, a taxpayer with an adjusted gross income of $20,000 and medical expenses of $5,000 would be eligible to deduct $3,500 of their ...
Net investment income tax. Finally, income from dividends, capital gains and other similar forms of income may face an additional surcharge of 3.8 percent, called the net investment income tax ...
These deductions are set forth in Internal Revenue Code Section 62. A taxpayer's gross income minus his or her above-the-line deductions is equal to the adjusted gross income. Because these deductions are taken before adjusted gross income is calculated, they are designated "above-the-line". Thus, those deductions allowed in computing "taxable ...
Examples of investment income. Investment income is commonly found in brokerage accounts and interest-earning savings accounts. While retirement accounts such as IRAs and 401(k)s may earn ...