2016 adjusted gross income w211/4/2023 ![]() ![]() But your adjusted gross income is different from net income. Since AGI is essentially your gross income minus your adjustments to income, some people refer to it as a net income. So when you e-file your federal tax return, you will need your AGI to digitally sign and verify your identity or set up a Personal Identification Number (PIN) for your verification. The IRS also uses AGI to prevent taxpayer fraud when you submit your federal tax return electronically. Thus, the lower your AGI, the greater the deduction. But if your AGI was $50,000, you will be able to deduct $10,000 from your AGI, which is the amount that exceeds 10% of your AGI ( 10% of $50,000 = $5,000). Hence, if you report a medical expense of $15,000 not reimbursed by insurance and have an AGI of $100,000, you will be able to deduct the $5,000 that exceeds 10% of your AGI ( 10% of $100,000 = $10,000). The more deductions are made, the less your taxable income and your taxes are less.įor example, you may be able to deduct unreimbursed medical expenses over 10% of your AGI if you choose to itemize deductions. To arrive at your AGI, the IRS makes deductions from your gross income. The credits and exemptions you qualify for, including charitable deductions, deductions for adoption expenses, dependent tax credits, and earned income credit.
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