What is the first step in computing Adjusted Gross Income (AGI)?

The correct first step in computing Adjusted Gross Income (AGI) is to add up all the income items. This step involves gathering all relevant income sources, which may include wages, dividends, rental income, business income, and any other forms of taxable income.

Once you have a complete picture of your total income, you can then proceed to identify and apply any adjustments to that income. Adding up all income items lays the groundwork for evaluating your overall financial situation, which is critical in the subsequent calculations that involve adjustments and deductions. Without accurately assessing total income, the process of calculating AGI would lack the necessary foundational data.

The other options involve steps that occur after determining total income and are thus not the first step in the AGI computation process.