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Adjusted gross income

Call it Adjusted gross income. Call it AGI. Call it the most interesting number on your annual tax return. Adjusted gross income is the amount of money on which you must pay federal income taxes.

Expanded Definition

To get your adjusted gross income, start with your gross income, then subtract government-approved deductions such as alimony, unreimbursed business expenses, and contributions to retirement plans. (This calculation does not include itemized deductions.) Congratulations, you've successfully adjusted your gross income for use by the IRS and other organizations.

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