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A.G.I. (Adjusted Gross Income)

How does AGI get calculated?

AGI (Adjusted Gross Income) is an IRS term that is related to a taxpayer's gross income after certain adjustments have been made to a taxpayer's gross income. The adjustments that are made to gross income are called above-the-line deductions. Specifically,

Gross Income - Above-the-Line Deductions = Adjusted Gross Income

Why is adjusted gross income an important number for pilot or flight attendant taxes?

Adjusted gross income is important for airline pilot and flight attendant tax calculations because it is one of the variables used to determine the value of the employee business expense deductions for a flight crewmember. The reason employee business expenses are affected by AGI is primarily because of the 2% limit. Because only the employee business expenses that exceed a pilot or flight attendant's AGI times 2% are deductible, the higher the crewmember's AGI, the lower the benefit of deducting employee business expenses.   Other variables such as the taxpayer's tax bracket also affect the tax benefit.

How are employee business expenses related to adjusted gross income?

Employee business expenses are simply one component of a taxpayer's itemized deductions (below-the-line deductions). In this sense, think of AGI as the line. Any adjustments or deductions that occur to gross income used to calculate AGI are above-the-line deductions. Any adjustments or deductions that occur to AGI used to calculate taxable income are below-the-line deductions.

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