Adjusted Gross Income

The term adjusted gross income can be used for both an individual and a business company. Adjusted Gross income defines the amount of the income for a business company or an individual that is taxable. The method of calculating adjusted gross income is quite simple as it involves the calculation of the gross income from your income sources and defining your taxable sources from this gross income and then deducting allowable deductions from this income. These deductions can be categorized as unreimbursed business expenses, medical expense of the individual, alimony and those retirement plans that are deductible. Another name of adjusted gross income is the net income of the individual or a business party.

At the individual level the adjusted gross income is reported on the page 1 of the federal tax return of an individual. This federal tax return document having an adjusted gross income over it can be used to achieve the eligibility of having financial benefits from the federal government. The benefits that can be achieved on the basis of adjusted gross income on the federal tax return include social security from the government and IRA contribution deduction limits at a personal level.

Other Related Accounting Articles:

• Above the Line Deduction
• Above the Line Deduction
• Open Market Rate
• Ability to Pay Taxation
• Debt to Income Ratio
• Net Operating Loss
• Factor Income
• Marginal Tax Rate
• Creditor
• Importance of Overhead Ratio