How to Calculate Adjusted Gross Income with an Hourly Wage
For tax purposes, your adjusted gross income is more important than your total income. Your adjusted gross income is your total income for the year minus all adjustments to gross income. Your eligibility for a number of tax deductions and credits is based on your total adjusted gross income. If your adjusted gross income is too high, you will not qualify for these tax benefits. If you earn an hourly wage, then your total annual income is based on your total work earnings plus any other income earned during the year.
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Instructions
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Determine your total hours worked over the past year.
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Multiply your total work hours by your hourly wage to calculate your salary for the past year. Your employer should have mailed you a Form W-2 or Form 1099 listing your total salary for the year. Double check your salary calculation with your employer's calculation.
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Add all other income earned during the past year to your salary. This figure includes income from other jobs, income from investments, rental income and alimony received.
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Add all withdrawals from retirement accounts to your income, including taxable withdrawals from work-sponsored plans and from individual retirement accounts. Loans from a retirement plan do not count as income. The total of all your annual income is your gross income.
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Subtract all applicable adjustments from your gross income. Adjustments to gross income include contributions to an individual retirement account, all alimony paid, contributions to a health savings account and the cost of self-employment health insurance. This calculation yields your adjusted gross income.
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Record this total calculation on the front of Tax Form 1040 for your tax return. List your adjusted gross income on the bottom of the front page on Form 1040.
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