How Is AGI Calculated?

You can use a 1040 form to help determine your adjusted gross income.

Why AGI?

Adjusted Gross Income (AGI) is the basis for your income tax liability. It determines both your tax bracket and qualification credits. If you're looking for your AGI from a previous year, it can be found on your tax returns (assuming you are using the standard Form 1040) on line 33 (the last dollar amount on the first page).

Gross Income

Calculate actual (gross) income. Actual income includes salary, interest earned, income from investments and basically any income you made through business, trade or investments. This is the basis for your AGI calculation. Your gross income is the money you earned through wages, interest, dividends, rental and royalty income, capital gains, farm income, unemployment and alimony.

Make Adjustments

Once you have actual Income (gross income), you can "adjust" it to calculate AGI. Adjustments are taken by subtracting out qualified deductions from your gross income as calculated in Step 2. Adjustments can include items like some contributions to IRAs, moving expenses, alimony paid, self-employment taxes, and student loan interest. You can also use an AGI calculator to verify your results.

References

• IRS Publication 501: Exemptions, Standard Deduction, and Filing Information

Resources

• CNNMoney.com: AGI Calculator
• IRS.gov: Tax Topic 500 (Deductions)