Which of the following steps is not part of computing AGI?

When computing Adjusted Gross Income (AGI), the process involves determining your total income and then making specific adjustments to reach the AGI figure. The first step involves adding all income items, which includes wages, interest, dividends, and other sources of income. The next step is to identify and total any adjustments to income, such as educator expenses, student loan interest, or certain IRA contributions.

The correct choice indicates that subtracting the standard deduction is not part of the AGI computation because the standard deduction is applied at a subsequent stage when calculating taxable income, not when determining AGI. AGI is calculated by taking total income and subtracting total adjustments, ensuring that the standard deduction does not play a role in the AGI itself. Understanding this distinction is crucial, as it sets the foundation for determining overall tax liability in the following calculations.