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In many cases, eligibility for tax benefits (including Economic Impact Payments), or the extent to which they may be claimed, depends on adjusted gross income (AGI) or modified adjusted gross income (MAGI).

Adjusted gross income is gross income (all the income you are required to report) minus certain deductions (called “adjustments to gross income”). Adjustments or subtractions you can make to your gross income to arrive at your adjusted gross income are limited to the following items:

 Alimony payments for pre‐2019 divorces and separation agreements

 Archer Medical Savings Accounts (MSAs) (for accounts set up prior to 2008)

 Business expenses of self‐employed individuals

 Capital loss deductions of up to $3,000

 Charitable contributions up to $300 ($600 for joint filers) if you don't itemize personal deductions

 Educator expenses up to $250

 Employer‐equivalent portion of self‐employment tax

 Forfeiture‐of‐interest penalties because of early withdrawals from certificates of deposit (CDs)

 Health Savings Account (HSA) contributions

 Individual Retirement Account (IRA) deductions

 Jury duty pay turned over to your employer

 Legal fees for unlawful discrimination claims

 Net disaster loss if you don't itemize personal deductions

 Net operating losses (NOLs)

 Performing artist's qualifying expenses

 Qualified retirement plan contributions for self‐employed individuals

 Rent and royalty expenses

 Repayment of supplemental unemployment benefits required because of the receipt of trade readjustment allowances

 Self‐employed health insurance deduction

 Simplified employee pension (SEP) or savings incentive match plan for employees (SIMPLE) contributions for self‐employed individuals

 Student loan interest deduction up to $2,500

 Travel expenses to attend National Guard or military reserve meetings more than 100 miles from home

Figuring AGI may sound complicated, but in reality it's merely a number taken from a line on your tax return. For example, AGI is the figure you enter on line 11 of the 2021 Form 1040 or 1040‐SR.

Modified adjusted gross income is merely AGI increased by certain items that are excludable from income and/or certain adjustments to gross income. Which items are added back varies for different tax breaks. For example, the MAGI limit on eligibility to claim the student loan interest deduction is AGI (disregarding the student loan interest deduction) increased by the exclusion for foreign earned income and certain other foreign income or expenses. All of these items are explained in this book.

Household income is a term in tax law used to determine eligibility for the premium tax credit to help pay for coverage purchased through a government marketplace. Household income is explained further in this book in connection with these tax rules.

Qualified business income. If you are an owner in a pass‐through entity—a sole proprietorship, limited liability company, partners, or S corporation—you may be eligible for a qualified business income (QBI) deduction. QBI for purposes of this personal deduction is explained further in Chapter.

TABLE I.1 Standard Deduction Amounts for 2021

Filing Status	Standard Deduction
Married filing jointly	$ 25,100
Head of household	18,800
Single (unmarried)	12,550
Qualifying widow(er) (surviving spouse)	25,100
Married filing separately	12,550

Taxable income. This is the amount of income remaining after subtracting deductions. Taxable income is the amount on which taxes are figured. Taxable income is also the threshold used for determining the QBI deduction explained in Chapter.