Calculating Adjusted Gross Income: <a href="https://proceffa.org/resume-title-guide-tips-and-examples/">Examples</a> & Tips

Calculating adjusted gross income (AGI) is an important step in determining your taxable income. AGI is used to determine eligibility for certain tax deductions, credits, and benefits. It is calculated by subtracting certain adjustments from your total income. In this article, we will provide examples and tips to help you calculate your AGI accurately.

## What is Adjusted Gross Income?

Adjusted Gross Income (AGI) is a measure of your income that is used to determine your taxable income. It is calculated by subtracting certain adjustments from your total income. AGI is an important figure because it is used to determine eligibility for certain tax deductions, credits, and benefits.

There are several adjustments that can be subtracted from your total income to arrive at your AGI. Some common examples of adjustments include:

• Contributions to a traditional IRA
• Student loan interest paid
• Alimony paid
• Self-employment taxes
• Health savings account (HSA) contributions
• Educator expenses

## How to Calculate Adjusted Gross Income

Calculating your AGI involves several steps. Here is a step-by-step guide:

1. Gather all necessary financial documents, such as W-2 forms, 1099 forms, and receipts for deductions.
2. Add up your total income. This includes wages, salaries, tips, interest income, rental income, and any other sources of income.

It is important to note that AGI is calculated before applying any deductions or credits. It is used as a starting point to determine your taxable income.

### Example Calculation

Let’s say you earned a total income of \$50,000 during the tax year. You made contributions of \$3,000 to a traditional IRA and paid \$1,000 in student loan interest. To calculate your AGI:

2. Subtract adjustments: \$50,000 – \$3,000 – \$1,000 = \$46,000

In this example, your AGI would be \$46,000.

## Tips for Calculating AGI

• Keep organized records of your income and deductions throughout the year.
• Double-check your calculations to ensure accuracy.
• Use tax software or online calculators to streamline the process.
• Review your AGI each year to identify any changes or adjustments that may affect your tax situation.

## Conclusion

1. What is the difference between gross income and adjusted gross income?