[Music] Hi, I’m Amir from TurboTax with some information
to help you better understand Adjusted Gross Income, also known as AGI. The IRS uses your AGI to determine whether
you can claim certain deductions and credits and the amounts you’re eligible for. The calculation is pretty simple. Your total income minus certain tax deductions
the IRS calls “adjustments to income” equals your AGI. You can find a list of those deductions on
the first page the standard Form 1040. Note that there will be a lot less of them
if you’re using a 1040A and none at all are allowed on a 1040EZ. Your AGI will also have an impact on the amount
of itemized tax deductions you can report. Some expenses must be reduced by a percentage
of your AGI. Your federal AGI can also have an impact on
your state return, as many states use your federal AGI as a starting point for calculating
your state taxable income and your eligibility to claim deductions. For certain tax deductions, the IRS uses a
calculation called MAGI or modified adjusted gross income. Your MAGI can change based on the deduction,
but it’s essentially your AGI plus any deductions the IRS requires you to add back in, like
tax exempt interest income. Calculating your MAGI helps to determine if
you qualify for these deductions. With TurboTax, we’ll ask you simple questions
and do the calculations for you. For more information about this and other
tax topics, visit TurboTax.com. [Music]