What Is AGI?
Adjusted Gross Income (AGI) is your gross income (all income you received during the year) minus specific deductions, known as adjustments to income. Your adjusted gross income is used to determine eligibility for many deductions and credits.
How Is AGI Calculated?
TaxSlayer calculates your AGI automatically based on the information you enter.
AGI Formula:
AGI=Gross Income−Adjustments to IncomeAGI=Gross Income−Adjustments to Income
Gross Income Includes:
- Wages, salaries, tips
- Interest and dividends
- Business income
- Capital gains
- Rental income
- Unemployment compensation
- Social Security benefits (taxable portion)
Common Adjustments to Income:
- Educator expenses
- Student loan interest
- IRA contributions
- Self-employment tax (50%)
- Health Savings Account (HSA) contributions
- Alimony paid (for divorces finalized before 2019)
- Tuition and fees deduction (if applicable)
Where Is AGI on the Tax Return?
Form 1040 (U.S. Individual Income Tax Return)
- Line 11: This is where AGI is shown on the current version of Form 1040.
Why Is AGI Important?
AGI is used to determine:
- Eligibility for tax credits (e.g., EITC, AOC, LLC)
- Phaseouts for deductions and credits
- MAGI (Modified AGI), which builds on AGI for further eligibility tests
- Whether itemized deductions (like medical expenses) exceed thresholds
Example Calculation
Let’s say a taxpayer has:
- Wages: $50,000
- Interest income: $500
- Business income: $10,000
- Student loan interest deduction: $2,000
- IRA contribution: $1,000
AGI = $50,000 + $500 + $10,000 – $2,000 – $1,000 = $57,500
Additional Information
If you reported income on your return and your Adjusted Gross Income is $0, it is likely due to your adjustments exceeding or equaling your income. This is common if you report foreign income and exclude the income using Form 2555.