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A.G.I. (Adjusted Gross Income)

AGI (Adjusted Gross Income) is related to a taxpayer's gross income after specific modifications have been made to his or her gross income. The modifications that are made to gross income are called above-the-line deductions. Specifically,

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

For truck driver tax calculations, adjusted gross income is important because it is one of the factors used to determine the value of the employee business expense deductions for a trucker or owner-operator. Employee business expenses are affected by AGI primarily because of the 2% limit. Because of the 2% limit are deductible, the higher the truck driver's AGI, the lower the benefit of deducting employee business expenses.   Other variables such as the trucker's tax bracket also affect the taxes paid.

Employee business expenses are just one component of a trucker'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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