Once you have found your total income, calculate AGI by subtracting select items. Any taxable money from pensions, retirement plans, and social securityĬlick Here to Create Your Form W-2 in Less Than 2 Minutes.Contributions toward select types of retirement accounts.Any earnings you made from your own business.Taxable interest from your bank accounts.Next, you'll need to add all your other forms of income. If you have multiple employers, add Box 1 on each W-2 together. Start with Box 1 on your W-2 - this is your total income from the employer. This is the final number used to calculate your tax cost.Īlso read: What Happens If I Only File 1 W2 Form?Ĭalculating AGI starts with your W-2 form. Taxable income is your AGI minus personal exemptions and the standard or itemized deduction. For all these reasons, it's important to calculate AGI in your tax prep.Īlso read: The Difference Between W-2 And W-4 FormĪGI and taxable income are often mistaken. In many states, your AGI is also used to decide your state taxes. The same goes for employee business expenses and investment expenses. This number changes from year to year, but for 2017, it's 10%. For example, you can only deduct medical expenses that exceed a certain percentage of your AGI. AGI is also used to determine other deductions.
Our financial pros can walk you through what it means and how to calculate AGI.Īlso read: How Do You Get Your W-2 Online?ĪGI is your total gross income minus a few select deductions, or "adjustments." It's the first step toward finding your tax liability. One term that causes much confusion isĪdjusted Gross Income, or AGI. But educating yourself will pay off when you have a strong grasp on your finances. If you're new to the tax world, navigating the terms and jargon might feel like a minefield.
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