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You鈥檒l see the term聽鈥渁djusted gross income (AGI)鈥� repeated throughout your tax forms.

To get your adjusted gross income, you鈥檒l subtract the payments you鈥檝e made during the year that aren鈥檛 taxable, such as alimony or contributions to a traditional IRA.

The result 鈥斅爕our AGI 鈥� becomes聽the starting point for calculating your tax bill. From there, you鈥檒l subtract your allowable exemptions and deductions to find the amount on which you鈥檒l pay tax: That鈥檚 your taxable income.

If you have to file a state tax return, it typically also will use your federal AGI as a starting point. Credits and deductions specific to your state then聽figure in to determine your state taxable income.

Finally, AGI is the basis for many deductions and credits. For example, you can deduct unreimbursed losses from a fire or theft, but only when the losses are more than 10% of your AGI. The lower your AGI, the greater the deduction.

If you聽file taxes online, the software will calculate your AGI for you.

Available adjustments vary by tax form

Only taxpayers who file Form 1040 have access to the full extent of available credits and deductions that lower AGI, such as after-tax contributions to your Health Savings Account and certain moving expenses.

If you file Form 1040A, you still have access to some, but not all, available adjustments. Although these are subject to change year to year, available adjustments tend to include things like:

• Certain retirement plan contributions
• Tuition and fees
• Paid student loan interest
• Educator expenses

If you file Form 1040EZ, you can鈥檛 make any adjustments; your total gross income and your AGI are the same.

(In addition to AGI adjustments, there are other considerations that determine聽which tax form to use.)

How AGI is used when calculating taxes

Some of the itemized deductions you can claim when聽filing Form 1040 or Form 1040A may be limited by your聽AGI amount. Medical and dental expenses, for example, can be deducted only for amounts above 7.5% of your AGI. In other words, a lower AGI establishes a lower threshold for deductible costs.

AGI limits also apply to the miscellaneous itemized expenses category.

In one of the ironies of the tax code, even your income adjustments are subject to AGI limitations. For example, how much聽tuition you can deduct聽depends on your modified adjusted gross income, or MAGI. And calculating MAGI can聽reduce or eliminate adjustments to your聽AGI.

What is Modified AGI, or MAGI?

If you鈥檙e filing Form 1040 and itemizing deductions, such as tax-exempt interest or Social Security benefits, you also have to calculate your modified adjusted gross income, or聽MAGI. The calculation will add some of these amounts back in. Then MAGI acts as a baseline for determining the phaseout level of some聽credits and tax saving strategies.

If you鈥檙e filing Form 1040A, however, your MAGI is the same as your AGI.

This article first appeared at NerdWallet.