What are From AGI Deductions used for?

From AGI deductions, often referred to as allowable itemized or standard deductions, are specifically utilized to determine taxable income. When taxpayers have calculated their adjusted gross income (AGI), these deductions are subtracted from the AGI to arrive at the taxable income figure. Taxable income is essential, as it is the amount upon which income tax is calculated.

To contextualize, gross income refers to all income received before any deductions or taxes are factored in, and net income would usually refer to what remains after all expenses and deductions have been accounted for, which is not the focus of From AGI deductions. Additionally, while tax credits reduce the overall tax liability, they are separate from the deductions that impact taxable income. Thus, the role of From AGI deductions is solely to adjust the AGI to yield the taxable income, making option B the correct choice.