Okay, so how is it adjusted? And how is it gross?
Adjusted Gross Income (AGI) refers to all the money you make that you have to pay taxes on. It includes your salary, bonuses, money you make from mutual fund distributions, your freelance job, that vacation home you rent to the weird woman with the parakeets, and anything else that the IRS (God's financial quarterback) can dip into when it’s time to pony up income tax.
AGI matters at tax time, but it’s also a big deal if you decide to buy a house. Your banker will take a look at your AGI when deciding how much to lend you, so it can decide whether you can afford a fixer-upper with the ten-foot Elvis bouffant on the roof, or the fancy condo with only a modest-sized Elvis shrine. The higher your AGI, the more the bank will generally be willing to lend you.
Related or Semi-related Video
Finance: What is the IRS?19 Views
Finance allah shmoop What is the i r s Well
i rest might be the three most hated letters in
the alphabet Well after d m v a pms and
well maybe std The i r s is the internal
revenue service Their internal i e inside the government they're
in charge of collecting revenue A k a They take
money from your pocket in the form of taxes and
they deliver it to uncle sam and they you know
service you and it doesn't feel good So yeah these
are the guys from the us treasury department who checked
to make sure you filled out your income tax forms
correctly and submitted the proper amount And if you screwed
up in any way they will let you know about
it and a half in the form of angry letters
Phone calls knocks on your front door rocks through your
back window Whatever it takes to get you to pay
your fair share of taxes Like why should you get
away with not paying when the jones has paid all
they owed Or the irs can do even worse and
audit you with an audit he irs will request extensive
and very specific information and records from you Paycheck deductions
all kinds of things You claim that you did that
were deductible that may or may not have been forcing
you to spend hours upon hours at your public storage
unit digging through boxes you hoped and prayed you'd never
see again Well after the third solid week of having
your financial history poked and prodded like you've had to
turn your head and cough you uh might actually be
ready and willing to trade in those three letters of 00:01:35.13 --> [endTime] irs for rough one of those stds instead
Up Next
What is the difference between progressive and regressive taxes (flat tax vs. marginal tax)? In the most basic sense, progressive taxes affect the...
What is the difference between taxable and untaxed returns? Not all returns and investments are taxed. Some of these can be considered nontaxable i...
What is ordinary income versus long-term gain income? Hit play to find out.
When you realize a gain or loss, it means that you turn an investment into cash. Thrilling, we know.