Which of the following describes Adjusted Gross Income (AGI)?

Adjusted Gross Income (AGI) is a key figure on a tax return that is used to determine eligibility for various tax benefits and credits. AGI is calculated as gross income minus specific deductions, but it is not simply the total of all income or the income after standard deductions. Rather, it represents the amount of income that will be used to assess eligibility for benefits such as the Earned Income Tax Credit, deductions for student loan interest, and other tax-related calculations.

This distinction is crucial because while AGI does incorporate elements of gross income and deductions, it serves a specific purpose in tax calculations beyond just being the total income or the starting point for further deductions. Thus, understanding AGI as the basis for determining eligibility for certain tax benefits helps clarify its importance in the overall tax process.