When filing a tax return, where is the adjusted gross income (AGI) typically calculated?

Adjusted Gross Income (AGI) is calculated before arriving at taxable income. It represents an individual's total income after specific deductions and allows taxpayers to account for certain expenses that can lower their taxable income. AGI is a critical figure as it not only influences the tax rate applied to taxable income but also determines eligibility for various tax credits and deductions.

To arrive at AGI, a taxpayer will first sum all sources of income, such as wages, dividends, capital gains, and rental income. Afterwards, they will subtract any adjustments to income, which may include contributions to retirement accounts, student loan interest deductions, or tuition fees. This calculation takes place prior to the determination of taxable income, which further assesses allowable deductions and exemptions.

Positions that suggest AGI is calculated "after taxable income," "at the end of the return," or "in a supplementary form" misunderstand the structure of the tax return process, as AGI is foundational to understanding a taxpayer's financial picture before moving on to figure out their overall tax liability.