Your adjusted gross income is one factor that determines how much tax they owe. If you plan today, you can lower your AGI.
Here are a couple things taxpayers can do now to lower their AGI:
Know how adjusted gross income affects taxes
A taxpayer’s AGI and tax rate are important factors in figuring their taxes. AGI is their income from all sources minus any adjustments or deductions to their income. Generally, the higher the AGI, the higher their tax rate, and the more tax they pay.
Tax planning can include making changes during the year that can lower a taxpayer’s AGI.
Contribute to a Health Savings Account
Claim educator expenses if they’re a qualifying educator
Pay student loan interest
Save for retirement
Retirement savings can also lower AGI.
Contributing money to a retirement plan at work like a 401(k) plan can reduce a taxpayer’s AGI.
Investing in a traditional IRA plan is another way to save for retirement and lower AGI.
Self-employed SEP, SIMPLE, and qualified plans are also retirement options that can lower AGI.
Have a question about your situation?
Our team can review your records and explain your options.
Schedule a ConsultationThis article is for general information only and is not tax or legal advice for your specific situation.