For startup founders, AGI is more than just a tax figure—it's a reflection of the economic reality of building a business. In addition to standard deductions like contributions to retirement plans (e.g., SEP IRA or Solo 401(k)) and self-employed health insurance premiums, startup founders can often benefit from adjustments that account for the distinctive expenses of entrepreneurship. For example, early-stage founders may deduct qualified business expenses related to startup costs, such as legal fees for company formation, initial marketing or branding expenses, and even some research and development expenditures if they meet IRS criteria. Home office deductions and travel costs for investor meetings or industry events can also qualify, helping to lower your AGI and, consequently, your taxable income. These adjustments provide a more accurate picture of your net income by recognizing the investment you're making in your startup's growth, ultimately supporting better tax planning and financial management.
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