Adjusted Gross Income
Gross income reduced by specific above-the-line deductions, a key figure for many tax limitations.
REG loves to bury AGI inside a multi-step calculation: the tell is a question that hands you gross income, a pile of adjustments (educator expenses, HSA contributions, the deductible half of SE tax, student-loan interest, traditional IRA), and then a phaseout or floor that secretly depends on AGI. The hinge is sequencing — you must reach AGI before applying the 7.5%-of-AGI medical floor or the AGI-based charitable ceilings (generally 60% cash / 30% appreciated property). Watch for MAGI: the student-loan-interest deduction and IRA phaseouts add back certain exclusions, so MAGI ≠ AGI, and the exam plants a distractor where you stop at plain AGI. (Note: investment-interest expense is capped by net investment income, not AGI — don’t be lured into an AGI percentage there.)
The classic trap is mixing categories: above-the-line adjustments (which produce AGI) are not the same as the itemized/standard deductions that come after AGI, and neither is a credit that cuts tax dollar-for-dollar. Hook: adjustments are “above the line,” AGI is the line, deductions live below it.
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