How do you calculate adjusted gross income?

Adjusted gross income is calculated by taking an individual's gross income and subtracting adjustments to income from this figure, according to the Internal Revenue Service. Adjusted gross income can also be found on a particular year's federal income tax return.

Gross income is defined as any money, goods, services or property an individual receives that is not considered tax-exempt, states the IRS. The IRS-approved list of adjustments include individual retirement accounts, alimony paid, bad debt deductions, moving expenses, student loan interest deductions, tuition and education expenses. A low adjusted gross income is advantageous because it is the first number calculated when determining how much a taxpayer owes the IRS, according to BankRate.com.