Which of these is a characteristic of adjusted gross income (AGI)?

Adjusted Gross Income (AGI) plays a crucial role in determining eligibility for various tax benefits and credits. AGI serves as a foundational figure used by the IRS to assess an individual's tax liability and eligibility for certain deductions, credits, and other benefits. Many tax benefits phase out as a taxpayer's AGI increases, meaning that understanding AGI is essential for effectively planning taxes and maximizing eligible deductions.

For instance, several deductions and credits, such as those for education expenses or contributions to retirement accounts, have specific AGI thresholds that must be met to qualify. As a result, accurately calculating AGI is essential, as it impacts the taxpayer's overall tax situation.

While the other options present various assertions about AGI, they do not hold true in the context of its definition and application:

• The assertion that AGI is always higher than gross income is incorrect, as AGI is derived by subtracting specific adjustments and deductions from gross income.

• Stating that AGI cannot include any investments is misleading since AGI does account for certain types of income, including investment income, but it also deducts specific expenses and adjustments.

• Lastly, AGI does not require a flat percentage deduction; instead, it is calculated through specific adjustments based on an individual's