Adjusted gross income definition: The sum of all wages, dividends, tips, interest, capital gains, annuities, and any other income earned during a year

We now illustrate with real life examples.

Example #1:

In 2009, Peter earned 15,000 USD working part time as a taxi driver. He also earned 200 dollars a week working as a math tutor for 20 weeks. Finally, peter earned 50 dollars of interest income from a saving account

What is Peter's adjusted gross income?

Earnings = weekly earning × number of weeks worked

Earnings = 200 × 20 = 4,000

Adjusted gross income = wages + interest income

Adjusted gross income = 15,000 + 4000 + 50

Adjusted gross income = 19,050 USD

Example #2:

In 2009, Matha earned 80,000 USD in real states investment. She also earned 50,000 dollars in annuities and 20,000 of interest income. Finally, Martha made 100,000 dollars with her website selling educational software

What is Martha's adjusted gross income?

Adjusted gross income = wages + interest income

Adjusted gross income = 80,000 + 50,000 + 100,000 + 20,000

Adjusted gross income = 250,000 USD

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