{"id":2458,"date":"2017-12-13T18:00:40","date_gmt":"2017-12-13T18:00:40","guid":{"rendered":"https:\/\/web.blockadvisors.com\/?p=2458"},"modified":"2018-03-07T20:15:11","modified_gmt":"2018-03-07T20:15:11","slug":"what-is-agi","status":"publish","type":"post","link":"https:\/\/www.blockadvisors.com\/resource-center\/tax-prep-and-planning\/what-is-agi\/","title":{"rendered":"What is AGI? And How Can You Reduce It By Years\u2019 End?"},"content":{"rendered":"

It\u2019s the holiday season\u2026 While your mind might be on buying presents and enjoying festive events, you may want to consider adding something else to your to-do list: finding an answer to\u00a0what is AGI?<\/em>\u00a0and discovering ways to reduce it.<\/p>\n

Even this late in the year, it\u2019s not too late to lower your tax bill for the upcoming tax season. In fact, there are several actions you can take in a relatively short amount of time and improve your tax situation, many of which involve looking into eligibility for additional tax deductions.<\/p>\n

Here is a little more information about AGI, and why it\u2019s important to consider reducing it before Dec. 31, 2017:<\/p>\n

What is AGI & What Does It Have To Do With Taxes?<\/h2>\n

Gross income is the total of everything an individual earns in a year. Adjusted Gross Income, or AGI is your gross income less \u201cabove-the-line\u201d deductions. AGI affects other items on your tax return, including eligibility for and the size of some deductions and credits, how much of your social security is taxable, and much more. Ultimately, it is a component of your taxable income.<\/p>\n

What Is The Difference Between Taxable Income and AGI?<\/h2>\n

As explained above, your gross income includes amounts from your W-2 and other information documents that you must report on your tax return. It also includes income from other sources, like rental profits, unemployment income, taxable Social Security payments, pensions, and side jobs. AGI is gross income less above-the-line deductions.<\/p>\n

Your taxable income is your AGI minus tax deductions and exemptions.<\/p>\n

After calculating AGI, you can claim the standard deduction and personal exemptions to reach taxable income. Or, if eligible, you can itemize deductions instead if total itemized deductions are more than the standard deduction. When working on individual taxes, then, the AGI is an important but intermediate step in determining how much of one’s income is taxable.<\/p>\n

How Can You Reduce Your AGI?<\/h2>\n

Some deductions you may be eligible for to reduce your adjusted gross income include:<\/p>\n