Your Adjusted Gross Income (AGI), is a calculation of your above-the-line deductions subtracted from your total income.
You can find this on line 37 of Form 1040.
Total Income – Above the line deductions = Adjusted Gross Income
Your total income (line 22) includes the total of the following:
Wages, salaries, tips, etc., Taxable interest, Tax-exempt interest, Ordinary dividends, Qualified dividends, Taxable refunds, credits, or offsets of state and local income taxes, Alimony received, Business income or (loss), Capital gain or (loss), Other gains or (losses), IRA distributions, Pensions and annuities, Rental real estate, royalties, partnerships, S corporations, trusts, Farm income or (loss), Unemployment compensation, Social security benefits and Social security benefits.
Your Above-the-line deductions (line 36) includes the total of the following:
Educator expenses, certain business expenses of reservists, performing artists, and fee-basis government officials, health saving account deduction, moving expenses, deductible part of self-employment tax, self-employed SEP, SIMPLE, and qualified plans, self-employed health insurance deduction, penalty on early withdrawal of savings, alimony paid, IRA deduction, student loan interest deduction, tuition and fees, and domestic production activities deduction.
Credits and Deductions
Your AGI is the foundation of your tax return which determines your eligibility for many deductions and credits. Once you figure your AGI, you can either subtract the standard deduction or itemized deductions to get your taxable income.
If you have above the line deductions it is beneficial as it reduces your AGI. When itemizing deductions, taxpayers can deduct dental and medical expenses if it exceeds 10% (subject to change) of their AGI.
Your AGI is essential when e-filing your return and authenticating your identity when contacting the IRS. In order to e-file, you must provide your prior year AGI. If your AGI is incorrect, you must provide your PIN instead.