Adjusted gross income

Oil and gas deductions are an example of above the line deductions.

Above the line deductions can push your AGI down.

This line is something that you can move.

And so it's a two part problem.

Or you could take the itemized deduction where you itemize your mortgage interest, state and local taxes, or SALT for short, and charitable contributions.

Below the line deductions are great too, but the goal is always maximize above the line deductions first and then bring in below the line deductions.

Because once you set that line, the AGI, where it is, you can only do so much with below the line deductions to offset it.

So it's not just about getting tax deductions.

So making the maximum credit of $1,000 for an individual or $2,000 for a married couple filing jointly.

For 2026, it's available to single filers with an adjusted gross income AGI below $40,250.

For head of households, below $60,375.

And joint filers, below $80,500.

So it's confusing because provisional income is only used in this specific application of determining how much every social security income is taxable.

So it's not a common calculation that, you know, like AGI, for example, that applies to a bunch of other things.

So provisional income, it's your modified adjusted gross income.

plus half of your social security benefits.

That gets you your tentative adjusted gross income.

And then To get this version of modified adjusted gross income used in the calculation, there's a number of add-backs.

So these are things you would have excluded from your gross income or you deducted above the line to get to your AGI that now you add back into that definition of income.

And there's... kind of a long list of items here.

I prefer to have the lowest rate kind of thing.

Okay, so that's income that ultimately gets to your adjusted gross income, your AGI.

Now what What offsets that income? Because below the line is the adjusted gross income.

You know, you start talking about adjusted gross income.

And then qualified medical expenses.

And again, when you're doing our tax planning challenge, you'll enter the full values, but then we'll figure out for you.

So like with qualified medical expenses, only the portion in excess of 7.5% of your AGI can actually be itemized.

When we're talking about charitable donations, only the portion in excess of a half a percent of your adjusted gross income can be itemized.

And by the way, that three-thousand-dollar deduction can be valuable, right? Some deductions lower your tax bill, but not your AGI, such as itemized deductions.

But a capital loss does lower your AGI, AGI standing for Adjusted Gross Income, and your AGI can affect various aspects of your finances, such as your ability to take other deductions and credits, whether you can contribute to a Roth IRA, how much you may pay for healthcare through the ACA or Medicare, and maybe your eligibility for college financial aid.

So if your AGI is just a bit over a threshold that has a negative impact on your finances, taking a capital loss in excess of capital gains could be a solution.

Uh, and as you consider which losses to recognize and how much, keep in mind that short-term gains are taxed at the same rate as ordinary income, and that rate is higher than the tax rate on long-term capital gains.

Then, with the cash that you would have donated to the charity, you can just buy back the shares and reset your cost basis to today's higher price.

You don't have to wait 30 days.

If you itemize your deductions on your tax return, you can also deduct the contribution up to a limit of 30% of your adjusted gross income.

Contributions above that limit can be carried forward for five years.

So if it's just Social Security, then it depends how much you receive.

So are your Social Security benefits taxed? It really depends on your MAGAI, your Modified Adjusted Gross Income.

So it's your combined income, your AGI, the Adjusted Gross Income, non-taxable interest, and half of your Social Security check.

So only half of that Social Security check gets figured into whether you pay taxes on those social security benefits, not whether you pay taxes, but whether you pay taxes also on those social security benefits.

And there's,