What is the formula used to calculate adjusted gross income (AGI)?

The formula for calculating adjusted gross income (AGI) is total income minus adjustments. This calculation begins with total income, which encompasses all income sources such as wages, dividends, and interest. Once total income is determined, specific adjustments are applied. Adjustments to income can include contributions to retirement accounts, student loan interest deductions, and alimony payments, among others. By subtracting these adjustments from total income, you arrive at AGI, which is a crucial figure used for determining eligibility for various tax credits and deductions on your tax return. This computation is vital in the tax preparation process as AGI affects the overall tax liability of an individual.