Term Answer Description Deductions such as employee, personal retirement, higher education, and support expenses are included in this category Adjustments A. Adjusted gross B. This is mortgage interest expense income Deductions C. This is adjusted annually for changes in cost of living D. This term refers to the result after deducting expenses like alimony paid and self-employment taxes, to name a few Itemized deduction Exemption Itemized deduction example Capital gains tax categories Steps tO AGI Steps to taxable income E. This term equals gross income less adjustments F. This is taxed as ordinary income if held less than 12 months G. This term refers to allowable expenses that are deducted from AGI H. This can be claimed if taxpayer provides more than half their support. I. Reduce AGI by the standard deduction and allowable exemptions Many of these are based on a percentage of AGI