What is the result of calculating Adjusted Gross Income (AGI) for taxpayers?

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Calculating Adjusted Gross Income (AGI) is a fundamental step in determining a taxpayer's taxable income. AGI serves as the starting point from which various deductions and credits are applied to arrive at the final taxable income. It includes a taxpayer's gross income with certain adjustments, such as contributions to retirement accounts or student loan interest paid, which can reduce the overall income considered for tax purposes.

By establishing AGI, taxpayers can see which deductions they may be eligible for, as many deductions and credits phase out at certain AGI levels. Therefore, accurately calculating AGI not only impacts how much tax a taxpayer ultimately pays but also helps in identifying eligibility for various tax benefits. This makes AGI essential for tax planning and ensuring compliance with tax regulations.

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