A person’s adjusted annual income is their actual annual income artificially adjusted for some special factor. For example, when applying for some assistance programs a person’s income may be adjusted by a set amount multiplied by each dependent. Usually, annual income adjustments favor applicants with lower income.
Other typical adjustments to annual income include credits for childcare expenses, handicap assistance expenses, medical expenses, and special treatment for retirement status. Annual income adjustments do not actually alter the annual income of the person. They merely artificially adjust the income for qualification purposes only.