Taxable income is calculated by subtracting which from adjusted gross income (AGI)?

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Multiple Choice

Taxable income is calculated by subtracting which from adjusted gross income (AGI)?

Taxable income is found by taking adjusted gross income and subtracting deductions. After you determine AGI, you either take the standard deduction or you add up itemized deductions, and you choose whichever results in a larger deduction. This reduction lowers AGI to taxable income. Tax credits don’t reduce taxable income themselves; they reduce the tax you owe after the tax is calculated. Amounts paid toward taxes earlier (withholding or estimated payments) affect your refund or amount due, not the calculation of taxable income.

Taxable income is found by taking adjusted gross income and subtracting deductions. After you determine AGI, you either take the standard deduction or you add up itemized deductions, and you choose whichever results in a larger deduction. This reduction lowers AGI to taxable income. Tax credits don’t reduce taxable income themselves; they reduce the tax you owe after the tax is calculated. Amounts paid toward taxes earlier (withholding or estimated payments) affect your refund or amount due, not the calculation of taxable income.

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