How to Calculate Adjusted Gross Income (AGI)

Posted on July 30, 2023 in guide

Adjusted gross income (AGI) is a calculation used by the Internal Revenue Service (IRS) to determine your taxable income. It is calculated by taking your gross income and subtracting certain deductions and adjustments.

To calculate your AGI, you will need to gather the following information from your tax return:

  • Your gross income
  • Your deductions
  • Your adjustments

Once you have this information, you can follow these steps to calculate your AGI:

  1. Add up your gross income. This includes all of your income from all sources, such as wages, salaries, self-employment income, interest, dividends, and capital gains.
  2. Subtract your deductions. These are expenses that you can deduct from your gross income to lower your taxable income. Common deductions include:
    • Itemized deductions, such as medical expenses, mortgage interest, and charitable contributions
    • The standard deduction, which is a set amount that you can deduct if you do not itemize your deductions
  3. Add your adjustments. These are certain income and expenses that the IRS allows you to add back to your gross income after you have already deducted them. Common adjustments include:
    • Student loan interest
    • Tuition and fees
    • Self-employed health insurance deduction

Once you have completed these steps, you will have calculated your AGI. This number will be used by the IRS to determine your taxable income and your eligibility for certain tax credits and deductions.

Here are some additional things to keep in mind when calculating your AGI:

  • The deductions and adjustments that you can claim will vary depending on your filing status and other factors. You can find more information about these deductions and adjustments in the IRS Publication 17.
  • If you are self-employed, you will need to use Schedule C to calculate your net business income. This income will be included in your gross income when you calculate your AGI.
  • If you have any questions about how to calculate your AGI, you should consult with a tax professional.

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