1. What is AGI?

Adjusted Gross Income (AGI) is your total gross income minus specific adjustments. It's an important number used to determine your taxable income and eligibility for certain tax credits and deductions.

2. How to Calculate AGI from W2 Wages

The basic formula for calculating AGI from W2 wages is:

Where:

• \( Wages \) — Income reported on your W2 form (Box 1)
• \( Adjustments \) — Eligible deductions like student loan interest, IRA contributions, etc.

Explanation: This calculation gives you your AGI before standard or itemized deductions are applied.

3. Importance of AGI

Details: AGI is used to determine your taxable income, qualify for tax credits, and is often requested by financial institutions when applying for loans or financial aid.

4. Using the Calculator

Tips: Enter your total W2 wages (Box 1 of your W2 form) and any eligible adjustments. The calculator will compute your AGI.

5. Frequently Asked Questions (FAQ)

Q1: Where do I find my W2 wages?
A: Your W2 wages are reported in Box 1 of your W2 form provided by your employer.

Q2: What are common adjustments to income?
A: Common adjustments include educator expenses, student loan interest, IRA contributions, and self-employment taxes.

Q3: Is AGI the same as taxable income?
A: No, AGI is before standard/itemized deductions and qualified business income deductions are applied.

Q4: Why is my AGI higher than my take-home pay?
A: AGI includes pre-tax deductions (like retirement contributions) that were subtracted from your paycheck but are still part of your gross income.

Q5: How often should I calculate my AGI?
A: You should calculate your AGI when filing taxes and when applying for financial aid or loans that require it.