What is adjusted gross income (AGI)?
If you’ve already filed your taxes this year, you may have come across your adjusted gross income (AGI) on your tax forms. AGI is an important factor when it comes to tax returns and how the IRS determines taxable income.
In general, AGI is a person’s gross income minus specific adjustments—such as student loan interest or alimony payments. If you use a tax preparer or tax software, they may be able to help you calculate your AGI—or do it for you.
Key takeaways
- AGI can be found by subtracting specific adjustments from gross income.
- AGI helps determine taxable income, tax rate, and how many deductions and credits a filer can claim.
- Ensuring your AGI is correct could help you get the tax refund you may be entitled to.
Adjusted gross income, explained
AGI helps the IRS determine how much income tax people are required to pay each year, as well as their tax rate and how many deductions and credits they can claim during tax season.
Typically, the more deductions and credits a person has, the lower their taxable income and tax liability will be. And that can mean a lower tax payment or a higher tax refund.
How to calculate AGI
AGI is calculated by subtracting certain income adjustments from your gross income. For the full list of gross income sources and adjustments to income, refer to the IRS’ page about Form 1040.
You could use IRS Form 1040, a tax preparer, tax software or an AGI calculator to help calculate your AGI. The IRS’ Estimate Your Adjusted Gross Income (AGI) tool may also help.
Examples of income sources
To find your gross income, you’ll generally consider all sources of taxable income. These sources can include:
- Salaries, wages or tips from a job
- Other earned income, like a scholarship or grant
- Qualified dividends from an investment portfolio
- Retirement and pension distributions
- Social Security benefits
- Capital gains or losses
Common adjustments to income
The adjustments a taxpayer can take vary from person to person. But some of the more common adjustments to income include:
- Educator expenses
- Health savings account (HSA) contributions
- Student loan interest
- Alimony payments
- Individual retirement account (IRA) contributions
Keep in mind that adjustments to income are not the same as deductions, which are sometimes called tax write-offs. Adjustments to income help determine a person’s AGI, which affects the deductions they can take. Deductions—like the standard deduction—can affect your taxable income. When assessing financial health, businesses might also consider metrics like gross profit. This metric involves different types of adjustments compared to personal tax adjustments and provides insight into a company's profitability.
Adjusted gross income vs. modified adjusted gross income
According to the IRS, modified adjusted gross income (MAGI) is generally equal to AGI before student loan interest is deducted. MAGI helps determine eligibility for things like Medicaid, premium tax credits, and savings on marketplace health insurance plans and the Children’s Health Insurance Program.
Adjusted gross income FAQ
If you still have questions about AGI, these frequently asked questions may help:
Can I find my AGI on my W-2?
You can’t find your AGI on your W-2 form, but your W-2 is a starting point for calculating it. There’s a box at the top of your W-2 that lists your wages, tips and other compensation. That’s your unadjusted gross income for that job.
How do I find my AGI from last year?
To find your AGI from the previous year, you have a few options:
- Look for it on your tax return, IRS Form 1040.
- Call the IRS directly at 800-908-9946 to request a mailed copy of your tax records.
- Fill out Form 4506-T to request tax return information.
- Fill out Form 4506 to request a copy of your tax return.
- Go directly to the IRS website and use the Get Transcript Online tool, which will allow you to view your AGI from the previous year.
- If you use a tax preparation service, the preparer might assist you by retrieving your AGI from the previous year.
How do I find my AGI on my tax return?
Your AGI can be found on line 11 of IRS Form 1040 and in your additional income and adjustments to income on Schedule 1 Form 1040.
What’s the difference between AGI and taxable income?
A person’s taxable income may not be the same as their AGI. Taxable income is the portion of a person’s income that’s subject to taxes. It’s calculated by subtracting deductions and tax credits from AGI.
Adjusted gross income in a nutshell
AGI determines taxable income, tax rate, and how many deductions and credits a person can claim. Understanding AGI and how it applies to taxes can help you be a step ahead during tax season.
Even when it’s not tax season, you can stay up-to-date on how to file your taxes. And as tax time approaches, be sure you know how to identify and avoid tax scams to help protect yourself.
