How is Total Available Income calculated?

Total Available Income is calculated by taking the adjusted gross income (AGI) and adding any nontaxable income. This measure reflects the total income that an individual or household can use for various purposes, including budgeting, planning, and determining eligibility for various programs or benefits. By including nontaxable income in the calculation, one obtains a more accurate picture of the financial resources available to a taxpayer.

Adjusted gross income (AGI) serves as a foundational figure in tax calculations, representing total income subject to further adjustments such as specific deductions. When nontaxable income is added to AGI, it enhances the understanding of overall financial well-being, as it accounts for additional funds that are available for personal use but not subject to income tax.

Other options may misrepresent or incorrectly calculate this total by either limiting the scope of income considered or using deductions or exemptions that pertain to tax liability calculations rather than available spending capacity. This ensures that the focus remains on true financial resources rather than just taxable income.