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Adjusted Gross Income is the amount of income you collect after all qualified income is summed together and all the qualified deductions are subtracted. For tax purposes, the adjusted gross income figure is used to determine whether a taxpayer is eligible for certain tax benefits. The first step is to determine gross income, which is any money earned in a calendar year. Gross income includes wages, tips, interest, taxable social security benefits, dividends, capital gains, royalties, income from retirement accounts, alimony, etc. The income received from any of the gross income sources is added together. Once gross income is added, you then subtract any alimony paid, any student loan interest, moving expenses, any qualified medical expenses. This total is the adjusted gross income. For tax purposes, this amount is the net amount of income that is taxed.