Meaning & use
adjusted gross income
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Meaning
noununcountablefinanceAmerican
In the US tax system, a person's total yearly earnings minus certain permitted deductions, used to work out how much tax is owed.
Grammar: Usually no article: your adjusted gross income determines your credit.
Patterns
- your adjusted gross income
- adjusted gross income of $X
Your adjusted gross income decides whether you can claim the credit.
She reported an adjusted gross income of just over fifty thousand dollars.
Retirement contributions can lower your adjusted gross income.
Common combinations
- calculate your adjusted gross income
- The software will calculate your adjusted gross income from the numbers you enter.
- lower adjusted gross income
- A lower adjusted gross income may qualify you for more benefits.
- modified adjusted gross income
- Some programs use modified adjusted gross income instead.
- report adjusted gross income
- You must report adjusted gross income on the first page of your return.
- adjusted gross income limit
- The adjusted gross income limit rises slightly each year.
Synonyms and how they differ
- AGI
- AGI is just the abbreviation and is more common in forms and conversation.
- taxable income
- Taxable income is lower, because it is found by subtracting further deductions from adjusted gross income.
- gross income
- Gross income is the total before any adjustments, so it is higher than adjusted gross income.
Word family
- adjust verb
- to change slightly to fit
- adjustment noun
- a small change, such as a deduction
- income noun
- money received, especially from work
Commonly confused: adjusted gross income or net income?
adjusted gross income vs net income
Net income is what you have left after all taxes and costs. Adjusted gross income is calculated earlier, before most taxes are subtracted.
Practice
Which figure is usually calculated from your total earnings after subtracting certain allowed deductions, but before standard deductions?
Choose one answer.
Adjusted gross income is total income minus specific permitted adjustments. Net pay is what lands in your bank account, which is not the same thing.
Make it your own
Write a sentence using “adjusted gross income”, then check it and compare it with the examples above.