The reason why Adjusted Gross Income (AGI) is important is because a lot of limits are defined in terms of your AGI; e.g., if your AGI is too high, you can't deduct IRA contributions, etc. Of course, this is the IRS, so nothing is simple. Limits are often expressed as an MAGI (Modified Adjusted Gross Income), which is your AGI plus or minus a few more things. The MAGI is differently slightly differently for every category that requires it (that is, there is no one single MAGI).
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