In short, knowing your adjusted gross income on a W-2 form is essential to understanding your taxable income and maximizing tax benefits such as deductions and credits. Here are a few other instances to consider:
Thus, it's crucial to understand AGI to accurately calculate taxes owed and use the appropriate deductions and credits available. It can also be used in determining eligibility for specific deductions or credits.įor example, a taxpayer may need to reach a certain level of AGI before qualifying for the Earned Individual Income Tax Credit. AGI calculates an individual's total tax liability for the year.
